Essential Observations that are a Basis for TrendCalc Advice and Strategies:
What 30 years of experience as an investment advisor and a lifetime of study have taught us.
- History tends to repeat itself. “The Street” (all collective investors) when confronted with the same set of circumstances (news events, fundamentals, etc.) tends to react in similar and identical ways. These reactions can often (but not always) create predictable patterns.
- Stock markets and individual stock prices are leading indicators. What people know, believe or expect to happen is already reflected in current prices.
- Markets almost always move ahead of major news announcements (whether it is good or bad, fundamentally based, or macro or micro in nature). If someone knows or believes they know something before other market participants, buying or selling will show up in individual investments, sectors or major markets to some degree.
- Prices move in trends – a layman exam of charts and price and volume averages of stocks, commodities, interest rates or currencies illustrate noticeable investment trends.
- Market values are determined mostly by the interaction of supply and demand. Prices are influenced by rational factors (fundamentals such as reported earnings and sales prospects) and irrational factors (such as opinions, moods and feelings).
- Forecasting tops and bottoms is a fool’s game. No one can consistently pick the tops and bottoms of markets or individual securities. However, a profitable investment edge can be created by just following the ebb and flow of capital markets, aka trend following.
- Things in motion have a tendency to stay in motion.Trends exist and can be used as the basis for sound, evidence-based portfolio strategy.
Phil Hammond, CFP®
Chief Portfolio Strategist
The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.