New Year 2017 will be an exciting year for the global stock market with Donald Trump as the new US president, recovery of emerging markets and crude oil market, rising interest rate and a bullish US economy. Let’s learn how to position in stock market with 2 winning strategies: 1) Buy Low Sell High, 2) Buy High Sell Higher.
The US contributes to 40% of global stock value, therefore it should be a key player that determines our stock market outlook in 2017. The US economy has been consistently bullish, supporting the stock market. US unemployment rate has declined by half from 10% to 4.7% in Dec 2016. Based on the historical unemployment rates of US since 1950 (see chart below), we could observe that the US economy is entering the last phase of bull run as the unemployment rate is falling below 5%, moving towards the critical 4% value, reflecting the peak of the US economy.Lower unemployment rate implies that more new jobs are created, therefore more spending power for the people, which helps the business to grow with higher sales, eventually reflecting as higher stock prices due to stronger fundamentals in financial statements. The US stock market has been bullish in the past few years, following the trend of US economy, and I think this is likely to continue in the year 2017.
The US S&P500 stock index has achieved new historical high on 6 Jan 2017 with 2276 points. Based on Dr Tee (Ein55) Optimism Strategy, the US stock market is close to danger zone with 74% Optimism in the long term (see chart below), implying that the probability of bear market risk is 74% while the upside potential is limited, at only 26%.
There have been mixed feelings in the stock market. Some people have stopped investing, worrying about the peak of US stock market but unknowingly the stock prices become higher and higher with time, they may regret of missing the train, hoping to have the last ride.
But there are actually many mechanisms to make money in stocks. Here are 2 winning strategies for the New Year 2017, to be aligned with one’s unique personality:
1) Buy Low Sell High
This strategy is suitable for long term investors who hope to invest safely, or are hoping to buy good fundamental stock at low price, sell high in future or hold for long term. The US and global stock markets are approaching higher optimism level, but the chances of global financial crisis are high, and any unexpected global event in near future could trigger the bear market.
Investors will need to be very patient, and in other words, ignore the temptation of the bullish market, take profit while others are greedy (Optimism >75%), and standby enough capital to prepare to buy low when Optimism of global stock market is below 25% again. The control of emotions is critical to buy low when others are fearful.
2) Buy High Sell Higher
Not everyone is a patient investor. Some people are more suitable for short term trading, in which they could follow momentum trading to buy high and sell higher in near future. A stock price could be at high price but the trend is bullish, therefore the price is sustainable for the short term, having the potential to go up even higher with time.
This strategy is more suitable for short term trading in the last phase of bull market, following the trends of stock prices, supported by news, speculations, business, economy, etc. When the trend has stopped, the traders have to stop as well or apply reversed trend in trading. The control of emotions is very critical as daily news could affect the traders’ psychology. As the elements of probability are stronger here, one must be able to take profit or cut loss in time.
There are other variations of the strategies, eg. an investor could buy low for strong fundamental stocks, sell high for short to medium terms. This way, an investor could also enjoy the last phase of the bull run in stock market with integration of trading strategies.
We should learn to find top 10 global giant stocks as players of our dream team, buying good business at discounted price at low optimism, ahead of others who may be fearful. Mastery of investment clock is very critical to profit consistently from stock market.
Like I have mentioned previously, the safest time to buy a stock is when everyone is afraid the sky will fall down while the business is still operating normally with consistent performance. This could be a rare opportunity to buy during a crisis, we should learn how to take this advantage to truly buy low sell high.
When Optimism Strategies are combined with Fundamental Analysis (value investing & growth investing), Technical Analysis (support / resistance / trends), and Personal Analysis (mind control of greed and fear), it is very powerful when one is able to take the right action (buy, hold, sell, wait, or short) at the right time aligning with own personality.
The unique Optimism Strategy developed by Dr Tee provides a special advantage to know which investment (stock, forex, property, commodity, bond, etc) to buy safely, when to buy, when to sell, including option of long term holding. So far, over 10,000 audience have benefitted from Dr Tee high quality free courses to the public. Take action now to invest in your financial knowledge, starting your journey towards financial freedom.
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