2009
TRADING/INVESTMENT STRATEGY AND TACTICS
Filed Under (Finance Help) by Admin on 13-05-2009
Strategy is understanding the season. Tactics are deciding if we need to take an umbrella today or if we should put on sunscreen. Often strategy and tactics are in agreement using an umbrella in Autumn. Sometimes they are less compatible which is why people in Autumn are also prepared for quite warm days. The market condition is similar. The strategy messages are sounding caution, but tactically there are many opportunities. Part of this confusion comes from the difference between a rally and a trend.
But first, here is a chart that continues to frighten us. The first is the DOW performance during 1929-30. It shows the fast rally rebound that lifted the market 48% before dumping it again into the collapse of 1930 and 1931. The market also rose again with rallies of between 23% and 35% on several occasions in 1930 and 1931. Great trading, but shocking investment opportunities. This type of situation remains a possibility even in these apparently ebullient times where many public figures are pronouncing the end of the recession. These are in many cases the same figures who were unable to identify the start of the recession.
