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Predicting The Future
In the world of investing, it is "prices," not investors, that predict the future.
Despite this, most investors believe they can predict the future. Or at least, that someone else can.
At FibTimer, we rely on the fact that most investors are convinced they can predict the future. This is where most of our profits come from.
Looking For The Holy Grail
Trend trading is based on one piece of data that is always accurate... "price." But this is just too simple an answer for
most investors.
Looking for the Holy Grail, investors spend untold sums of money on analysis software, trading systems, and market gurus. All in order to predict the future.
However there is no Holy Grail. There never has been and there never will be.
But this doesn't mean profits, indeed huge profits, cannot be made in the markets.
They are just not made by most investors.
True Believers
FibTimer profits because we rely on the fact that most investors and traders believe they can predict (forecast) the future.
As these investors buy and sell, the "Greater Fool Theory" kicks in. We will write a future commentary about the Greater Fool Theory, but for now, it is simply this:
Investors buy a stock with the belief someone will pay more for that stock in the future. This continues as a stock is traded up in price. As more investors buy and sell the
same share for higher sums, sentiment begins to build that higher prices and profits are almost a certainty.
Market trends are born of changes in sentiment. As more investors believe they can buy a share and sell it at a higher price (looking for the "Greater Fool"), more and more investors (believers) jump on board. Investor psychology in its most basic form.
Of course, someone has to wind up holding those shares with no one interested in buying them. This is when the trend changes.
The "Greater Fools" are holding shares they cannot sell without a loss.
As sentiment changes, the markets begin to drop. Eventually the new trend, to the downside this time, builds a head of steam. Investors feel they can (or must)
sell shares. They will be able to buy them back at a lower price. (The Greater Fool Theory in reverse).
Trend After Trend...
Trend, after trend, after trend. All defined by changes in price. Rarely forecasted, or there would not be so many investors on the wrong side of trades.
But those trend traders who understand that investors move with a herd like mentality, can use this information to profit.
As the herd starts moving in one direction, what changes? ... "price"
Using price to determine trend, then jumping on board the trend and riding it till the end, is where true profits lie.
Don't Let Anyone Tell You
Do not let anyone tell you they can forecast the future direction of the markets. We will not tell you that we can do it,
and we hope you will not let anyone else convince you they can.
Obviously, if 100 market forecasters make predictions, someone will be right. But consistently being right is another story entirely.
Following trends, determined by changes in price, is the only consistent path to solid profits. It is not right all the time. Nothing is. But
trends usually move much farther than anyone ever expects, and in trading those large trends, huge profits are made.
Nothing Has Changed
When looking at the long term... change is constant. Because change is constant, uncertainty is constant.
From uncertainty, trends emerge. Sentiment changes, true believers begin to buy into the new rally, and another trend is born. Over, and over, and over. Month after month and year after year.
The markets have come a long way in recent years, with instant quotes, trading software, a mind numbing amount of technical indicators.
But one thing that has not changed is, investor's reactions to change.
FibTimer exploits the reactions of investors. Those reactions are embedded in prices and lead to trends. In this respect, though trading is now done
at the speed of light, nothing has changed.
Recent articles from the FibTimer.com market timing services;
It's Different This Time
A Closer Look At "Price"
Investor vs. Trader...Which Are You?
The Other Side Of The Trade
Market Timing And The Presidential Election
Let Your Profits Ride...Rules For Successful Market Timing
Critical Issues For Market Timers
Disappointment And Regret
Job Search: Market Timer Needed
Discipline and Market Timing
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All Rights Reserved.
FibTimer reports may not be redistributed without
permission.
Disclaimer: The financial markets are risky. Investing is
risky. Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy or
sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that
future results will be profitable. |
