How to Beat the "Short-Termism" Running Wild in the Markets Now

I got an interesting question earlier this week while in Las Vegas, where I was speaking at the MoneyShow...

"What works best right now?"

Usually that's a question related to which specific stocks, bonds, ETFs, or other funds you want to buy.

But in this case, the person asking wanted to know what kinds of investment tactics work best given current market conditions and how you adjust to all the volatility gumming up the works.

That's a savvy question - and a critically important one, I'd add, especially right now.

Asking which stocks are "best" is only half the battle when it comes to big profits. To really hit the home runs you and I both know are out there, you've got to know which methods work best and when to use 'em.

Right now, for example, the markets are completely dominated by tweet-driven trading. This favors day traders and the institutional big boys because it caters to the short-term trading methods and tactics they use.

But that doesn't mean you're out of luck as an investor, though. Far from it. You just have to change up your approach a bit.

Let me show you how...

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How to Be Smarter and More Agile Than the Crowd

It's very counter-intuitive to step back even though stepping forward to get closer to the action seems like the way to go - especially in the news-driven, headline-dominated, Internet-connected world we live in.

I made this same point on stage in Las Vegas: You want to simplify your profits, the technical indicators you use to find 'em... even the nature of the choices you make.

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If you're used to hitting $1,000 homers using big sweeping moves, for example, you may have to settle for $250 wins here and there that match up to the daily back and forth we're being served up.

Don't get me wrong: The big trends will be back - there's no doubt about that - but they do not exist right now, so it doesn't make sense to try and profit from moves that aren't there... like everybody else is trying to do.

The other thing to think about is that you may want to broaden your trailing stops, rather than tighten them up like most investors are doing. That's a function of psychology in as much as it's a game of numbers.

That's also how subscribers following along in my paid sister service, the Money Map Report, captured three triple-digit winners in a single day during last Wednesday's volatile trading.

I point this out because (a) the Money Map Report is the most conservative investing research service I write and (b) because I want you to understand that what I'm suggesting works.

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For instance, if you've been using 2% to 5% trailing stops, like one gentleman told me he was, and you're frustrated that you've been getting prematurely bounced out of positions you'd rather stay in, then try moving that back to 10% to 15%. That way, you avoid the "chop" with very little additional risk.

The key is to find an amount you're comfortable with but outside the small range the big boys are playing in.

It's a lot like letting two bullies fight it out on the playground when you were young, while stepping out of the way so you can still enjoy recess.

Another way around the short-termism plaguing the markets is to lengthen your perspective.

Why It Pays (a Lot) to Take the Long View

For instance, if you're using a seven-day moving average or a 14-day relative strength indicator - two commonly used technical indicators - try increasing those to 20 or even 40 days. Doing this helps you see the trends that are hiding in seemingly random data become apparent again.

The research is very clear on this point: We have a tendency to panic and narrow our focus when the you-know-what hits the fan - and doing that, in turn, causes us to lose something called "situational awareness" - meaning knowing what's going on around you in a critical situation.

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Naval aviators, for instance, are taught to constantly scan their instruments and their environment to avoid this, and my friend Steve is a great example. Even today, long after he's retired, we can't drive down the freeway without him scanning his instruments, the road, the sky, the mirrors, and more. For him it's reflexive, but for most folks, it's something they'd be wise to learn.

Anyway, my point is, we can't lose sight of the situation - that the great companies we talk about frequently are still great.

What's more, they're still highly likely to make you gobs of money.

Examples include Microsoft Corp. (NASDAQ: MSFT), Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Raytheon Co. (NYSE: RTN), and NextEra Energy Inc. (NYSE: NEE). These companies all are tightly wired into the Unstoppable Trends; they make "must have" products and services the world cannot live without.

General Electric Co. (NYSE: GE), Sears Holdings Corp. (OTC: SHLDQ), Tesla Inc. (NASDAQ: TSLA), and Uber Technologies Inc. (NYSE: UBER), on the other hand, aren't any longer.

What's worse, they're going to get chopped up terribly, highly unlikely to ever regain the glory they once enjoyed.

Ultimately, the markets will calm down, and you want to be in the best possible position to profit when they do.

The alternative is almost too grim to contemplate. Plenty of investors were left waiting for a train that already left the station back in 2009. Those folks missed the rally and the life-changing profits that followed.

By just being aware of what's really happening out there, you're already far ahead of the game. And when you deploy and adjust the tactics we've talked about today, you'll have what it take to reap the returns you richly deserve.

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About the Author

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

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