*Dearest readers, consider this infotainment and whatever you take from it, build on it. :)
Dearest readers, I will say something controversial right off the bat- I do not think there are old or new, current or outdated stock indicators- just indicators. Indicators are math, and I personally believe math is discovered, not invented so math is eternal. Something eternal does not correspond with the concept of old and new, so there it is. :) This is why I have looked, quite fascinated, into video lectures and seminars that are some of the oldest on YouTube in order to try and find trading methods that worked well before this long superbull market we have been experiencing so long that most currently registered and working investment advisors in USA have not worked a single day before this crazy good market. How crazy is that? Investing without knowing a bear market or a boring stock market makes many of us ill-prepared for what is to surely come. One thing I learned is this- every indicator makes you money when a stock is going up! Haha! Now, many people ask "But can you beat the market?" Can you return in a year by short term trading than you can by letting the professionals invest your money for a fee and just let it ride? Most studies I have read say that no, you cannot beat the market. Today, however, I want to tell you why I believe this is wrong and why we should hope it is wrong because otherwise, the bear market will destroy people's gains and nobody will make money going long. Since the market does not go down to zero during a bear market, it means something still goes up during it.
Without further ado...
According to Investopedia, beating the market is described as follows:
Now, based on everything I have learned so far, the term beating the market is misleading at best, useless at worst. If most people think that you can beat S&P 500 by trading S&P 500, that is ridiculous at best. You would have to trade the index ETF, e.g. HSU and HSD here in Canada but you can never beat the index return that way because you cannot perfectly time market tops and bottoms. Why? Simple answer- you me and almost everyone else have too little money to create tops and bottom i.e. move the market in any significant direction. So, if you cannot create market bottoms and tops, you cannot beat the market.
There is another definition of beating the market that makes a lot more sense to me. Picking the stock to trade short term successfully and compound your gains to beat the performance of an index in the same year. Now once you look at it that way, beating the market is more than possible, though certainly not easy. Still, once you look at how much stocks can move inside a day, a week or a month, it is beyond obvious that for regular people with small accounts can beat the market riding the large investors' coattails (yep, not ashamed to admit that is one of the main reasons why small accounts can kick ass in the stock market).
So, by trading individual stocks short term during times of strong upward or downward momentum, you can certainly beat a bull market or outperform a bear market because, no matter what is happening in a market, there are stocks going up every day, some of which have little to no correlation with the overall market moves. Finding these stocks and trading them is especially important during a bear market, as bear markets can last years or even decades. For those of you who do not know this, Japan was once considered close to becoming the center of the world; it was Japan, not China, that was considered a true powerhouse in Asia. The bear market that, sadly, started in Japan in 1989 still goes on today, although some experts point this is changing as they look to invest there long-term. Nevertheless, a Japanese short term trader named Takashi Kotegawa traded in the 2000's and apparently turned $13,000 into 153 million dollars!!! I encourage you to do your research on Takashi, there is some conflicting information but learning about him may be relevant to upcoming market conditions.
Finally, you may say well yes this is all good but how would you find stocks that are starting to beat the market? A relative strength chart could help. You create a relative strength chart by comparing a stock with its index (please look into it yourself but I think you divide a stock by its index, then multiply by 1000).
There you have it, dearest readers- some infotainment for you to consider. Let me know if you are thinking about where the markets are going next and what that would mean for all of us.
Dearest readers, I will say something controversial right off the bat- I do not think there are old or new, current or outdated stock indicators- just indicators. Indicators are math, and I personally believe math is discovered, not invented so math is eternal. Something eternal does not correspond with the concept of old and new, so there it is. :) This is why I have looked, quite fascinated, into video lectures and seminars that are some of the oldest on YouTube in order to try and find trading methods that worked well before this long superbull market we have been experiencing so long that most currently registered and working investment advisors in USA have not worked a single day before this crazy good market. How crazy is that? Investing without knowing a bear market or a boring stock market makes many of us ill-prepared for what is to surely come. One thing I learned is this- every indicator makes you money when a stock is going up! Haha! Now, many people ask "But can you beat the market?" Can you return in a year by short term trading than you can by letting the professionals invest your money for a fee and just let it ride? Most studies I have read say that no, you cannot beat the market. Today, however, I want to tell you why I believe this is wrong and why we should hope it is wrong because otherwise, the bear market will destroy people's gains and nobody will make money going long. Since the market does not go down to zero during a bear market, it means something still goes up during it.
Without further ado...
According to Investopedia, beating the market is described as follows:
- The phrase "beating the market" is a reference to an investor or corporation seeing better results than an industry standard.
- With an investment portfolio, a market participant may have managed a return over a specific period of time, such as a year, that surpasses the returns of a market benchmark such as the S&P 500.
Now, based on everything I have learned so far, the term beating the market is misleading at best, useless at worst. If most people think that you can beat S&P 500 by trading S&P 500, that is ridiculous at best. You would have to trade the index ETF, e.g. HSU and HSD here in Canada but you can never beat the index return that way because you cannot perfectly time market tops and bottoms. Why? Simple answer- you me and almost everyone else have too little money to create tops and bottom i.e. move the market in any significant direction. So, if you cannot create market bottoms and tops, you cannot beat the market.
There is another definition of beating the market that makes a lot more sense to me. Picking the stock to trade short term successfully and compound your gains to beat the performance of an index in the same year. Now once you look at it that way, beating the market is more than possible, though certainly not easy. Still, once you look at how much stocks can move inside a day, a week or a month, it is beyond obvious that for regular people with small accounts can beat the market riding the large investors' coattails (yep, not ashamed to admit that is one of the main reasons why small accounts can kick ass in the stock market).
So, by trading individual stocks short term during times of strong upward or downward momentum, you can certainly beat a bull market or outperform a bear market because, no matter what is happening in a market, there are stocks going up every day, some of which have little to no correlation with the overall market moves. Finding these stocks and trading them is especially important during a bear market, as bear markets can last years or even decades. For those of you who do not know this, Japan was once considered close to becoming the center of the world; it was Japan, not China, that was considered a true powerhouse in Asia. The bear market that, sadly, started in Japan in 1989 still goes on today, although some experts point this is changing as they look to invest there long-term. Nevertheless, a Japanese short term trader named Takashi Kotegawa traded in the 2000's and apparently turned $13,000 into 153 million dollars!!! I encourage you to do your research on Takashi, there is some conflicting information but learning about him may be relevant to upcoming market conditions.
Finally, you may say well yes this is all good but how would you find stocks that are starting to beat the market? A relative strength chart could help. You create a relative strength chart by comparing a stock with its index (please look into it yourself but I think you divide a stock by its index, then multiply by 1000).
There you have it, dearest readers- some infotainment for you to consider. Let me know if you are thinking about where the markets are going next and what that would mean for all of us.