ISA Trend Investing - Master the Market and Make Millions
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Investment Fund, Wealth Building on 25th September, 2009.
Tags: gain, isa, isa trend investing, make millions, market's health.
How to Master the Market with ISA Trend Investing
In my previous blog I told you that ISA Trend Investing has enabled me to make gains of 80.6% over the past ten and three quarter months.
I also showed you how timing and market direction play crucial roles in achieving this kind of success.
Today I am going to explain to you why attaining mastery in reading the market’s health and direction is essential and how you can acquire the knowledge needed to make millions from your investments.
A Common Question Asked by Seekers of Wealth
Some people who haven’t read my book Liquid Millionaire ask me this question:
“Please explain why I need to learn about the stock market, its health and its overall trend? Can’t I just pick the best investments and then hold them for the long-term?”
When they ask this I explain to them that unless you get the trend and direction right, you are not going to get anything right and you are sure to lose money. I say that, because three out of every four investments (stocks and investment funds) move in the same direction as the market, you must be able to read the market’s health and direction or else you are doomed to fail like 90% of investors do.
May I now ask you a question?
Are you fascinated enough about the stock market to put in 10,000 hours to master it?
If you answered yes, that means you can simply follow in my footsteps and do exactly what I did.
Attaining mastery in reading the market’s health and direction is essential. And you can acquire that mastery by becoming a pro yourself – or by tapping into the mind of a stock market professional.
It is important for you to be aware that your tax-free account is going to eventually grow into six, seven and even eight-figures over the up and coming years. And when your account suddenly drops in value, you will need to know whether the fall is a healthy one or whether the drop is leading to something more serious. When your portfolio loses value, which it will, even when the market is in an uptrend, you are going to need to be certain whether the drop is healthy or unhealthy. You have to know whether to sit out the correction or whether you should be “parked” in cash on the sidelines.
Mastery Is the Key
Without the confidence that comes with knowing your stuff, you are more likely to make the wrong decision and end up possibly losing a lot of money. When the market does drop and you know with certainty that something is wrong, that is when you can get out of the market and get out fast.
Of course knowing with absolute conviction whether the market is in trouble or not can only be achieved when you have attained market trend mastery. As your capital builds up, the need for understanding market direction (health) becomes even more important. If you try to follow your gut instincts, you are going to experience plenty of pain, so please be careful.
Edwin Lefevre, author of the classic Reminiscences of a Stock Operator, once said, “In a bear market all stocks go down and in a bull market they go up.”
The people who failed to get out of previous bear markets such as 2000-2002 and the one that began Oct 2007 will have probably lost anywhere between 50% to 80% of their portfolio’s value.
And imagine if you took an 80% loss just two years before you were planning to retire?
The scary thing is that a portfolio valued at one million pounds would reduce down to just £200,000. I am sure you will agree that that sort of damage would probably cause some serious financial and emotional pain.
As a reminder, an 80% loss on your portfolio needs a 400% move to the upside just to get back even.
How long would that take?
Awareness Can Make You Rich
When the market takes a heavy fall, investors who do not know how the market works will blame either the fund manager or their advisers for their losses. But what they really should be doing is noticing and understanding the link between their fund value dropping and the market heading downwards.
You see, most investors do not know that three out of four stocks will always move in the same direction as the market. If they realised this basic law of how the market works, they would be able to switch their thinking from blaming to learning. And if they did learn how the market works, they’d then be able to act swiftly when the market was showing signs that it was unhealthy and quickly switch into the safety of cash to help protect and preserve their hard earned money.
To find out more about how you can achieve stock market mastery and make millions from the upcoming stock market boom please click here for a FREE sneak preview of my book Liquid Millionaire.
Happy reading!
Your friend,
Stephen Sutherland
The UK’s Leading Authority in ISA Trend Investing and Author of Liquid Millionaire
Please Note: As always, let me remind you that I am not a financial adviser and therefore not authorised to give advice on what investments to buy or sell.
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