Successful Investing and Market Timing Begin with this Concept
I want to share a critical insight with you whether you time the market or not. "Sun and Storm Investing™" is about making money by market investing or market timing whether there is a Bull market OR a Bear market. Please allow me to explain.
Ever heard someone say "I love Biotech?" Well I may love it for a week, a month, or a year, but if the Biotech market is going down why would I want to "love it"? The markets are not there to be loved or hated. They are there to be observed, and I want to help you learn how to read the markets as best I can.
NOTE: Please REFRESH the page or you will not see the current chart below.
5-17-2013 Bonus Chart of the Week:
The 10 Year Treasury chart still looks like a diagram of a yo yo's trajectory as the chart below shows. The "Great Rotation" from bonds into stocks may still be underway. On 5-16-2013 the Treasury market rallied and then gave the gains back on Friday. The trend is still UP in yield (sell off in Treasuries) and the past week looks simply like a pause.
Market Timing Treasuries (TNX, TLT, TBT) 5-17-2013 Close
There is more on the 34 other markets in this week's free newsletter (subscribe using the subscription box slightly down and to the right).
Be sure to check out the GLD Market Timing Chart this week GLD ETF Chart. Gold failed 2011 and 2012 support and although it bounced the entire bounce is now gone as the chart shows. Review the chart on the GLDTracker™ page. And one more thing. If you appreciate the chart, would you please take a moment and "Like" this page below? Thanks very much.
And please support my sponsors and affiliates if you are interested in what they offer. Thanks you and have a very successful week of investing and/or trading!
I thank Worden Brothers for the charting system. If you want to know more about the charting system I use every day, go to my "Other Resources" page on this site (see blue bar to upper left).
As always, it's your money and your decision as to how to invest it.
A Comparative Investment History Lesson Published 3-30-2013: So What Made You More Money Since the 2002 Tech Bottom? Gold or Big Tech?
The chart below shows gold plotted against the QQQ which is represented by the yellow line. Gold won.
Gold vs. Big Tech (yellow line; QQQ,NDX) 3-28-2013 Close
As always, it's your money and your decision as to how to invest it.
A Quick Lesson in Diversification: Small Caps Outperforming Large Caps?
Russell 2000 Small Cap Growth Index (RUO,IWO) based on data from 02-08-2013
Small caps have had quite a run since Nov.16th. I was assuming that the gains had outpaced those of the SP500 Index, but I was very wrong as the second chart shows. They've gone up in lockstep, which means there has been no benefit to owning one over the other.
What is the upshot of this? You might want to plot out comparison charts between your different holdings and be aware of the market with which a particular stock is correlated. That will prevent you from owning what in chart terms is the "all of the same thing." There is no benefit risk-wise of owning "all of the same thing." True diversification requires that some of your "intended holdings" go down while others go up. So if some go down while others go up, what is an investor to do? That's why I used the phrase "intended holdings." "Sell them when they break down" is the market timing answer, or you may choose to play the game of putting one's head in the sand and ride the pony back down the hill (buy, hold, and cross your fingers).
Russell Small Cap Growth Index
Russell Small Cap Growth Index Vs. SP500 Index (yellow)
Now back to the approach. So what does it take to excel at market timing or investing? The key is this: you must be willing to give up your love/hate relationship with stocks, indices, gold, oil, and the rest. That way, when it comes time to "pull the trigger" on a buy or sell, you will be doing it with a clear mind. OK, that is the first concept, but there's more. Market timing requires that you watch more than one market as I will now explain.
In contrast to my approach, there are many writers who follow just a few indices. Although they may have some value, it is extremely important to follow all the major indices to know what the market is doing. If you were a physician attending to an Intensive Care Unit patient, would you just follow the patient's temperature and pulse? No, because if you were not following the blood pressure, the patient could be having a stroke. So how can you possibly follow the markets and do proper market timing and technical analysis without following a number of indices? Currently, I follow market timing signals on 35 indices each and every market day.
You need to know what the SP500 Index is doing of course, but how could you follow that index without following the price of oil? Oil directly impacts the energy companies found in the S&P 500! Oil also effects the prices of all products to some extent as an expense to the manufacturer or service provider. How can you do market timing on the S&P 500 without following the Chinese market? We are very interdependent now with all the major world players, so that is why you must follow the large markets worldwide that can indirectly effect the market timing of US indices.
What about diversification? Is your portfolio complete? In my opinion, you should own some gold to protect yourself against US debt problems. If you buy gold, do you intend to just hold it forever? You could, or you could use market timing to trade a portion of that gold position using the GLD shares. My point is that you need to have a source of information that will allow you to monitor US markets, foreign markets, oil, gold, and the US dollar as well as critical sectors that are the lifeblood of the US economy such as information technology, biotech, and drug company indices. This is true whether you trade on a shorter term basis or not.
Are you aware that the performance of the banking index (BKX) is closely linked to the performance of the S&P 500? This is the case because banks supply the liquidity necessary for companies to get loans to expand and run their businesses as we saw in the banking crisis. The health of banking is seen by market timing the BKX.
Before we continue, by going over the two major errors many investors and traders make, I'd like to help orient you a bit to what is available on my website. Please refer to my "Read My Feed" page for recent updates, as the market picture can reverse quickly as you know (see "Read My Feed" on the blue Navigation Bar to the left).
To be sure you don't miss my FREE market comments and the SP500Tracker™ newsletter please sign up by entering your email address in the box to the upper right.
I send out the weekly Wall Street Sun and Storm Report, generally the evening before the start of the market week.
So what are the errors investors and traders make in using market timing? First, they sell at the wrong time, often much too late. Many investors wait far too long to sell and sustain big losses only to have the markets reverse. If that has happened to you, you can learn from the error, but you must have a plan to avoid that mistake going forward. You can develop that plan through the understanding you gain from my newsletter.
In fact, I’ve coined the term “Passive Shorting™” for this style of selling and re-buying of positions. Your cash becomes more valuable as the market declines and you have the opportunity to re-buy the same stock market or sector indices at better prices than you sold them. If you are more aggressive, you can go short, but if not, simply move a portion of your portfolio to cash. If you would like to learn more about this concept and see a graph of what it looks like have a look here:
The other major error that is made is buying at the wrong time. Investors often buy very late rather than understanding how to buy earlier and use stop losses to avoid creating large losses. You can sustain a small loss in order to make a big gain, but your entry point becomes important.
Don't be convinced that you cannot time the markets. Stock market reports that claim that are often not being honest. Why take excessive losses in bear markets? Market investing is impossible when you cannot avoid large losses. It is very difficult to recover from devastating losses. If you lose 50% you have to make 100% back to return to even. Losing that much indicates the need for market timing and technical analysis. You need to have a system in place that can protect you from incurring them.
I have come up with a very successful market timing system that uses both market timing technical analysis and an understanding of economic fundamentals. This means we can alert you to profits to be made and keep you aware of risks arising in the markets on a daily basis.
And that is not all. I follow more than just the important stock markets around the world, which is why my readers come from countries around the world. Serious investors and market timers are found all around the planet, and I'm grateful that they feel welcome here:
How often will you hear from me?Many newsletters are published once a week or once a month. They can’t help you when the market shifts quickly. If you are told to exit the markets a week or a month too late, what is the point? Why sit in stocks, bonds, or even gold and be run over by the market? Why not have a daily warning system in place? Being told there was a sell signal in the market last week is not very helpful. Through the website, Twitter, and the free subscription, I'm able to update you in a timely fashion, generally the same day there is a big market move if the information has changed since my previous communications.
I make you aware of the market trends, providing market timing insights so you can make decisions to protect your assets from the kind of downdrafts seen in 2000 and again in 2008-2009.
Could it happen again? Yes, because the very thing that caused the first blow up in the markets in 2008 is being done again. The Federal Reserve is providing cheap money to inflate stocks and real estate. Right now higher asset levels help the economy and protect banks from going under due to bad loans. When the money is withdrawn from the system as things appear to improve, the stock market may come down dramatically. You cannot have your cake and eat it too, even if you are the Fed Chairman. He's doing what he can many believe and others do not, but the economy has it's own way of healing.
I cover 35 different markets including US and major foreign markets, US stock sectors, large and small cap markets, corporate and junk bond markets, US Treasuries, the US dollar, gold, oil, and the commodities index.
I also follow key sectors that are pivotal to the economy at the moment including housing, banks, and real estate investment trusts, and I teach you how to consider the fundamentals in relation to the technical features of the markets.
Just by following the SP500Tracker newsletter, you will add tremendously to your understanding of the stock markets. I’ve been following the markets for years. It’s sort of like studying the behavior of a wild animal. Over time you learn the subtle signs of when it may attack and when it will sleep.
You learn when the markets are tiring and about to correct and when they are done falling and ready to burst to the upside. But you only learn by watching the behavior of the beast over time. And you will learn faster if you have a guide, a check on your own reading of the markets.
I should introduce myself. My name is David Durand, and I'm a physician. Yes, I'm a "Stock Doc" so to speak! Call me David or Dave and I'll answer. You may wonder why as a physician I chose to publish on investments. I've followed the markets intensely since 1987, and I love to share what I have learned. I correctly applied market timing and technical analysis and called the crash of 1987 and eliminated all long positions starting in September 1987 and removed the last dollar at 4 pm on the Friday before Black Monday. What’s different now and where you will benefit from my experience is that after the 2000 market disaster, I learned how to re-enter the markets near the bottom. Market timing should get you back in too, not just get you out! And I repeated that success in March of 2009 issuing an email on the day of the market’s reversal.
This is not to toot my own horn, but to let you know that I've been there to make some big calls and plan on continuing to do that as best I can.
I was one of the world’s first financial bloggers back in 2000, helping investors and traders to steer clear of the tech crash and have been writing ever since doing both market timing and fundamental analysis or "technofundamentals." I began writing before the word “blog” was invented. I have been perfecting this knowledge and approach since 1987 and the result is “The Wall Street Sun and Storm Report™.”
Testimonials from a Over a Decade of Investment Writing
Back in 2000 many of the investors who read my market timing blog emailed me and told me how they had saved their retirement money greatly due to my persistent guidance. They were able to take action and sell before the tech market truly fell apart.
I had letters from people like Deborah who in November of 2000 wrote to me to say:
"I do not wish to make myself a nuisance, I am not a "weirdo" and I promise not to bother you, but there was really no way I could express my gratitude for all you have done for me. I read and re-read your material voraciously and because of the excellent way you write, your knowledge of the charts and the clear way you express yourself, the detail, the expertise and the unselfishness with which you undertake to help others, I believed you and started making changes in the way I had invested/traded.
The result is that I still haven't recovered my full portfolio but it is coming back. I learned how to short the market (but I never do so until I consult with your reports first). Before I do anything in the market I look for your report. I know you probably already know this but you are brilliant in your analysis. In a way, you have saved my financial life. God bless you mightily for all you have done for me and others. You may never know in person what your generosity has meant but you are in my prayers daily that God will prosper you in every area of your life."
Isn't this why we all do what we do? We hope that what we offer in the world makes some sort of difference. My belief is that we ALL can do that by the way.
A decade later Stanton L. Triester wrote:"I recommend strongly that you become a subscriber to The Wall Street Sun and Storm Report™. Dr Durand does a magnificent job of pointing out the opportunities and possible pitfalls of investing in 35 markets on an ongoing daily basis. You make your own decisions but you have the help of his daily commentary to guide you."
Here is what another satisfied subscriber said in 2010: "I have been investing with David’s input since he started blogging his ideas. I’ve tracked his advice thru the tech bubble and crash in 2000, the revival of the markets after the commencement of the second gulf war and most recently the bear market we are experiencing . David has a real talent in looking at the markets for what they are and seeing the best way to get the most returns. The most important investing attribute I have learned from him has been to preserve capital. It saved me during the tech bubble and the most recent downturn in 2008. He also made me aware of the Gold rush we are now experiencing. So I’ve benefited in both preservation of capital AND capital gains. David has a real passion for investing and that is why I will continue to listen to all of his ideas. Regards, G.M."
I'll continue to do my best to show you the upside opportunities and protect you from the downside. As the Sample Issues page will show you, my calls stand on their own. You want to know what I've done for others lately and that is what that page will prove to you when you read it. What good is a surgeon who "used to have great operating skills?" And if I could only detect tops and not bottoms in the market, this would not be a useful exercise! Luckily, I am able to do both, and you can learn along with me. Fortunately, the same intuitive and intellectual skills apply to tops and bottoms.
But when I'm wrong, I admit it and when I'm right I am a believer in staying out of pride. But I have to tell you what I've done, so you can see the value of my reports that have saved investors money and made them money. You need BOTH. If someone can help you make the decision to get IN but NOT get OUT, he/she will be of no help to you. So would you please click on the Sample Issues blue navigation button to the left?
One of the reasons I honestly went into medicine was to help people. It is a wonderful thing to be able to do in your job, whatever you do. In this newsletter, I am glad to be of whatever help I can be to investors out there including you, to give you a special edge in understanding the markets and making them and saving them money.
What good did it do me to work long hours in medical research laboratories at Stanford? I honed my analytical skills as a medical student researcher and as a postdoctoral fellow while discovering a molecule at Stanford University that is now part of medical textbooks called the NF-AT molecule. I was the Director of Surgical Pathology at Stony Brook University Hospital where I also honed my diagnostic skills, diagnosing literally hundreds of diseases. And I applied the same desire for understanding to the markets. I knew there was also a better approach to market investing and market timing and came up with just such a diagnostic system for the markets.
I spent years studying patterns of molecular function in cell cultures and years studying disease under the microscope and what do you think this newsletter is all about? The same thing. Making diagnoses and understanding the workings of the market. After every market day I make diagnoses on 35 markets!
So many financial writers get lost in the maze of special technical analysis indicators that end up misguiding them or at least paralyzing their ability to take action. Stock market report writers often persist in repeating their theories day after day and forget the facts. If a market is moving up based on technical analysis, it’s moving up and you should not try to wish it down! If it’s moving down, learn to take action, instead of hoping that it moves up.
I keep you in the loop, so you know what the markets are doing just as you are aware of the weather each day. I will make you aware of the technical analysis trends so you can invest with the trends rather than fight them.
Am I perfect? No and as I said, pride is the downfall of every has been of a "great" trader and market timing expert. There is no system that is perfect. I've seen plenty vanish from view. I do my best to be honest about what the markets are doing each day and where they appear to be moving. Please see the disclaimer for the use of this website and/or the newsletters by pressing on the link below or on the navigation bar above. Please also read the disclaimers in the sample issues. They are important in that they ask you to take responsibility for your own investment and trading decisions.
I can provide my insights and then you decide whether to follow them by whatever criteria you feel comfortable. I am not here to tell you how to invest, but to give you suggestions as to what could work. Then you see if it seems right to you as well. I will do my best to keep you aware of which direction the markets seem to be moving. You decide when and how much you buy and sell based on your investing and trading preferences.
If you are not willing to accept any risk at all when market timing, you should probably not be investing. But the cost of that is tremendous given the low returns on T-bills and the like. I do my best to minimize risk, but I never seek to eliminate it, because if I did there would also be no possible gain. Read the page on the "Buying Checklist" to get a feel for that point. It is here:
Why the daily format? The market waits for no one. The market does not care if market watchers want to take the day or the week off. This has been proven time and time again in market history. My reports are issued by the next market morning after each market close.
In a 9-11 scenario or in the 1987 crash or the September 2008 multi-day crash, a monthly market timing newsletter would have been nearly worthless. There were signals to sell in all three of those instances using DAILY information, but waiting a month, even a week was just not good enough.
Why is knowing the market trend critical to successful investing? Because if you have the general market direction wrong, you will lose money 90% of the time. With “The Wall Street Sun and Storm Report™” you will know the current direction and strength of all 35 markets we follow and be investing with the trend rather than against it.
I show you what these 35 markets are actually doing on a daily basis, so you know the context in which you are making your buying and selling decisions whether you are a long term investor, a swing or intermediate term trader, or an online day trader.
You may have read other newsletters that say the same thing continually until they are right. Heard the expression “A broken clock is right twice a day”? We are flexible and change direction when the market changes direction. When the market timing signals arrive, we listen.
I tell you when it's time to buy too, so this newsletter is different from the permanently bearish newsletters in that I get back into the markets after the trend turns back up. It's a warning system for profits too, because if you can sell but cannot learn to rebuy, you will lose big as an investor. I will help you address these issues as you read my newsletters day after day.
I also tell you when it’s time to sell, so the newsletter is different from the permanently bullish newsletters that seem to love stocks so much that they can tell you to buy over and over, but never when to sell. You don’t need a market cheer leader or a market gloom and doomster. You need the truth that market timing offers along with fundamental analysis. You need to know “What are the markets doing NOW?”
In sum, I tell you when a given market is a buy and when it’s a sell. Sure, you make your own decisions. I do not want any blind followers. Our motto is that this is the "Website for Conscious Investors™." The information you are getting is not written from a stubborn point of view. Market timing done from a stubborn point of view will fail eventually. The naked swimmers are found out when the tide comes in as they say. That's one of Warren Buffett's favorite expression.
Being a Sun and Storm Investor™ is about being flexible and changing our minds when conditions in the markets change.
I am just as happy to buy as to sell the markets. This does not mean you have to short stocks or anything else, though you could. You can simply set your hard earned cash aside and reinvest it after the trend changes from down to up.
Despite my bold calls, I never recommend buying or selling all at once except under very special circumstances. It’s better to scale in and out.
Even as a long term investor, you can markedly improve your profits by picking the correct buying and selling points in the market trends. Why not at least trim your exposure when the markets start selling off, so the losses are diminished and so you have cash at the market bottoms? Why not use the "Passive Shorting™" method we discussed?
You need to know what the markets are doing and how strong or weak they are. Being afraid of a crash does not help. Being greedy at the market tops can be deadly to your capital. You need to know what is happening so you can take appropriate action. From that point there is no fear and no greed. If those are issues for you, there are ways of training yourself just as athletes do before hitting the golf ball or stepping up to the plate. Have a look at this when you have time:
Reading my market timing and investing analysis is easy. All the markets directions are summarized in an easy to read table every single day. I indicate good places to get IN and to get OUT based on market timing parameters. The market summary is very educational and helps you develop your own intuitive feel for the markets and how various technical and fundamental factors may impact the markets.
The point is that you LEARN how to invest from me and if you are a seasoned investor, you'll have someone to either check your thinking against or to stimulate new thinking. You will learn all about market timing, and because of the daily nature of our newsletter and the fact that I follow 35 markets, you will learn quickly. You learn to rely on your own insights that occur to you as you learn more.
Who do you have as a check on what your investment advisor or TV news is telling you? We all need to develop independent sources of information to check such advice.
I report to YOU, the investor, not to the brokerage firms and banks. Do you want independent information or one tied to the agenda of big investment firms? I recommend firms that I use myself, but will always disclose if I am paid to do so.
What if you already have a lot of experience with market timing, technical analysis and economic fundamentals? If you are very knowledgeable, it still helps to have a second opinion on the markets.
I will save you time too. If you have a non-investment job, it’s very difficult to follow 35 markets when you have a demanding schedule. But how many investors who fail to use market timing found out during 2008-2009 and back in 2000 that they had gone to sleep on their investments? I will do my best to help you be a conscious investor at all times. So join me and my community of Sun And Storm Investors™.
The publication is no longer available for purchase, but feel free to sign up for the free SP500Tracker below. I also publish articles regularly about gold, real estate investment trusts, investor sentiment, and various stock markets.
And thank you for joining me! I know you are here because you are excited about learning more about investment.
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