How to Beat the Market over the Long-Term
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Wealth Building on 1st April, 2011.
Tags: investment fund, isa investing, isa trend investing, stock market, stocks and shares.
How to Beat the Market over the Long-Term
On Wednesday I shared with you why people want to know how to beat at the market. This is not easy to do. In fact 90% of professional fund managers fail to beat the market. And so notice here that 10% do beat it and many of those 10% will be people who beat it consistently. These are the ones to focus one. The method I use that has fortunately helped me to beat the market since 1999 is something called ISA Trend Investing.
This method of investing is not flawless, but the timing element has managed to catch the start of every single bull market (up market) in the last 50 years. As always, timing is everything.
ISA Trend Investing in 3 Simple Steps:
Step 1 - Determine Market Direction
Step 2 - Find a Quality Fund (Using HIRE CAR™)
Step 3 - Time Buys and Exits
On Wednesday I gave you more information on steps 1 and 2, I will now tell you about the third step.
ISA Trend Investing Step 3 – Time Buys and Exits
Let’s start by talking about exiting.
By looking at price and volume action, whenever the market changes from an uptrend to a downtrend, you switch out of the market into a cash-based fund. You do a switch from the investment fund you are invested in into a cash-based fund.
You then wait in the ISA Cash Park until the market is deemed healthy again. This is when the downtrend officially becomes an uptrend.
You determine market health and direction by reading the market’s price and volume action.
When you do this right, it can help you to beat the market during bear markets and at times when the stock market totally collapses.
Let’s move onto buying.
The first thing I do before even considering buying is to make sure that the market is confirmed healthy. I do this by analyzing charts.
Once I am happy that the market is in an uptrend, I consider buying if the fund can successfully break out past its ideal buy point.
When buying your fund, fight for every percentage point
When buying a fund, you can keep commission and switching costs extremely low by using a fund supermarket such as Fidelity’s FundsNetwork™.
If you don’t go through a fund supermarket you might end up paying as much as 5% in commission fees. That means that your fund would have to go up 5% just to get back even.
And when you buy through a fund supermarket such as Fidelity’s FundsNetwork™, it means that you have the option not to use a financial adviser – meaning you save even more commission fees.
This can really help over time because the difference between getting 12% per year and 15% per year can be huge.
Exciting new developments on the blog!
As of next Tuesday I am going to be posting a blog 7 days a week.
On a Sunday and Monday I will continue to post articles that contain tips, strategies and key investment information.
However, now on a Tuesday through to Saturday I am going to provide you with Daily Market Insights, which will share with you my thoughts and feelings of the previous day’s activity on the stock market. For example: Tuesday’s blog will share with you my thoughts on Monday’s market behaviour.
This market commentary combined with key investor lessons will help you gain a clearer understanding of how the stock market works and help you improve your investing returns. By helping you to keep your finger firmly on the pulse of the market, and in just minutes per day, it will make your investing experience much more enjoyable. It may also make you an even better dinner guest!
Until the next time my friend.
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As well as booking your free session, you can also obtain a copy of my book Liquid Millionaire (RRP £21.97) for just 99p. I have just 99 copies to give away so be quick.
The number of telephone consultations (and free book giveaways) available is always limited.
You can email us or call 0870 757 8554 if you prefer.
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Related articles:
How to Beat the Market over the Long-Term - Part 1
