Dr. Chris Kacher and Gil Morales have weaved their way through the maze of market behavior since 1991. Their success is largely due to market timing. It is essential to be on the right side of the market trend. Buying when the market is moving lower or shorting when the market is moving higher is a recipe for disaster. Grandma’s cookies come out soft and doughy, enough to give any investor deep indigestion. And when money is on the line, indigestion can lead to coronaries.
Going with the flow or the trend makes life that much easier. It is a zen way of trading. Like the Buddha said, go with where the river takes you. Do not resist. All too many investors think they can outsmart the market so attempt to do so at their peril. Trying to call tops or bottoms may boost the ego when they get it right, but the odds of getting it wrong are far, far greater, thus over time will end up costing the investor money. Ego is a funny thing. The need for the ego to be right is so great, the investor would rather be right and poor than wrong and rich. Learning to control one’s ego and one’s emotions is key to good investing, as such is required to follow any market timing system.
Our Market Direction Model has on balance well outperformed the general markets over every market cycle. Dr. Chris Kacher created the market timing system in 1991 and it has kept him on the right side of the markets overall since then. Gil Morales has also managed to stay on the right side of the markets on balance in his 20+ year trading career as the stocks tell both traders what to do. When a stock hits their sell stops, they sell without argument. When a stock trends higher, they buy more along the way, utilizing various buy points such as the pocket pivot buy point or the buyable gap up buy point, both which are described in detail on virtueofselfishinvesting.com.
So going with the flow, or following the trend is a key feature in successful market timing. It will also help you sleep better at night. And when markets are trendless, the system may have a number of signal failures in a row, but it is key during such challenging periods to understand this is a temporary condition which will eventually come to an end. The first half of 2011 was such a period which was then followed by substantial profits in the ensuing months which more than made up for the small losses in the first half.
Thus it is key to understand the dynamics of markets and the rhythm of any market timing strategy so one does not jump ship prematurely, thinking the strategy has failed, when in reality, it could very well be unusual market conditions.
Also knowing one’s risk tolerance levels can help one stick with the strategy provided its worst drawdowns are within what the investor can handle. If such drawdowns exceed one’s maximums, one can always invest less so that the money lost in the worst situations when market timing is encountering difficulties is tolerable. Risk management in stocks as in life is key. Know thyself.