If you're feeling overwhelmed by the investment choices and economic challenges in today's financial markets, that's understandable. As a veteran writer and investor, I can attest that it's all too easy to wander off into the weeds by getting too complicated.
That's a big reason why - in my Strategic Advantage advisory service - we try to keep things as simple as possible. It's a strategy individual investors would do well to follow.
If you can stay out of bear markets and participate in the largest portion of bull-market cycles, you can make a lot of money as an investor. They key idea is to make the markets work for you when they are open for business - and to get out of them when they're closed.
Bull Market
Markman on the Markets: Historic Bull Run in Bonds Points to Higher Prices for U.S. Stocks
A sluggish month in the stock market has equity investors worrying about what's next.
But those equity investors would feel so much better if they'd just spend a little time studying the credit markets. And with good reason: The bull market in credit that continues to rage in the face of this stock-market lethargy leads us to one simple conclusion.
Stock prices have to head higher.
Indeed, independent analyst Brian Reynolds tells us that if stocks were trading at the same level as credit, the Standard & Poor's 500 Index would already be at 1,350 - 22% above where it closed on Friday.
For those who argue that the market has already rallied a great deal, or too much, let me just note that the S&P 500 would have to rise by another 41% just to get back to the level of three years ago. The key thing that bulls have in their back pocket is that investors are still trying to get used to the idea that the sky hasn't fallen - and have not yet priced in the prospects for a 25% increase in S&P 500 profits that we are likely to see in 2010.
But those equity investors would feel so much better if they'd just spend a little time studying the credit markets. And with good reason: The bull market in credit that continues to rage in the face of this stock-market lethargy leads us to one simple conclusion.
Stock prices have to head higher.
Indeed, independent analyst Brian Reynolds tells us that if stocks were trading at the same level as credit, the Standard & Poor's 500 Index would already be at 1,350 - 22% above where it closed on Friday.
For those who argue that the market has already rallied a great deal, or too much, let me just note that the S&P 500 would have to rise by another 41% just to get back to the level of three years ago. The key thing that bulls have in their back pocket is that investors are still trying to get used to the idea that the sky hasn't fallen - and have not yet priced in the prospects for a 25% increase in S&P 500 profits that we are likely to see in 2010.
Two Sentiment Indicators Investors Should Watch
Want to get an edge on the market? Sentiment might be a good place to look. Sentiment tells you how the majority of investors are positioned in a particular market, giving you clues about the next short-term move. Most of the time, it's an exercise in futility. The bulls and bears are about equally balanced, […]