Making Sound Investment Decisions in This Environment

Confused about when to buy and sell your stock/ETF? A raised financial situational awareness will serve to free you from the ties that bind you to brokers and talking head financial wizards alike. After all, we know how many of them made the right call going into the last crisis.

Financial situational awareness means you have the tools to accomplish these assessments yourself. This current stock market period represents one of the more trying times from the standpoint of trying to pick winners and letting them ride. Patience becomes a virtue at this time, but it becomes even more important to be able to tell what’s a buying opportunity or just a flash in the pan. The temptation is great to try and “make up” for losses of the recent past. This makes the decisions you make even more critical than at other less emotionally racked investment periods. We’ve seen the folly of pure fundamental based investments-in a panic the baby_and_the bath water all gets tossed out. A clear indication of directional movement above (buying opportunity) or below (toss out with the aforementioned baby) key indications will serve you well and help make your buying decisions evidence based and not emotionally based. This knowledge is what is referred to as financial situational awareness.

If you believe that more cycles of feast and famine are ahead in the markets-as I do, then it becomes even more critical to be aware of the start and end of these cycles. Keys to this lie in analysis of a few key indicators that can quickly help you assess if your favourite stock, ETF, MF or index is indicating a time to buy or stand aside. If anything is certain based on what we’ve seen in the last 10 years, it’s that the idea of buying a stock and holding it for an extended period and expecting it to provide a good return, is dead.

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