Is your investing success down to luck or market timing?
The professional investor would tend to say that their success is down to the latter market timing, knowing when to buy at the bottom and sell at the top. The reality is that only a few top investors have a knack for it, or are part of the club and trade by hearing it on the grapevine
Politicians are great at market timing
Jokes aside, did you know that Nancy Pelosi beat every hedge fund manager in 2023 with an eye watering 65% return?
“Nancy Pelosi beat every hedge fund manager in 2023 with an eye watering 65% return”
But if you are anti-Ukraine war, the world’s top stock trader congresswoman wants your source of funds investigated by the FBI for Kremlin funding. In saner times, the prevailing view was that superpowers with nukes capable of destroying the world more times than you can count on the fingers of your hand should figure out their differences diplomatically.
Anyway, staying with the theme, market timing, Capitol Trades could be a rich source of what the top market timers are doing.
Technical analysis; market timing for the rabble
For the rest of us, enshacked to our screens there’s technical analysis. The search word is market sentiment, which refers to the overall mood of the market. Your search will then take you to indicators of market sentiment.
These sentiment indicators help determine market trajectory as contrarian indicators, for example, excessive greed is bearish, and vice versa.
“Capitol Trades could be a rich source of what the top market timers are doing”
The VIX is also known as the Fear Greed Index.
High VIX levels can signal heightened worries, potentially a signal of a market bottom. A low VIX can suggest market complacency and is seen as a clue that a market may have peaked.
High Low Index compares the number of stocks that have reached 52-week highs to the number reaching 52-week lows. When the index is below 30 the stock price is trading near its lows, an indication of investors having a bearish sentiment. A reading above 70 indicates stocks near their highs, a bullish sentiment.
“Cycles are more difficult to fake than sentiment indicators”
– Win Investing
Moving averages is another technical analysis tool used for market timing
The problem with technical analysis is signals can be fake, particularly if markets are impacted by external facts such as central bank liquidity.
Market timing using cycle analysis
Cycles are more difficult to fake than sentiment indicators. The three major cycles to watch are; the central bank liquidity cycle, the investor psychology cycle, and the world order cycle.
The ultimate time to buy assets at a discount is when central bank liquidity is at a trough and investor sentiment is depressed.
Signs that central bank liquidity peaked a few years ago
That was one of many red flags that the system was blowing too rich, pardon the pun, and that central bankers would crash the 2020 lockdown money orgy with tightening.
Cycle analysis would suggest we are at the beginning of the next bull market, with the world order cycle being the wild card.