Making a Million Using Stocks and Shares ISAs - Part 9 of 26
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Investment Fund on 25th February, 2010.
Tags: investment fund, isa, isa trend investing, liquid millionaire, stock market.
Over the last few months, I’ve been writing an ISA Trend Investing Guide that shows you how you could make a million using ISAs.
Over the next few weeks/months, I’ll be giving you an exclusive sneak preview before the main newspapers get their hands on it because I suspect that some time in the future, you’ll be seeing a copy inside your favourite weekend broadsheet.
In last week’s blogs, I started to share with you the 7 lessons about how the stock market works and in my previous blog I covered Lesson 3: Three out of every four stocks (and funds) move in the same direction as the market and Lesson 4: The stock market can be timed.
This week you are going to learn Lesson 5: 75% of the market’s movement comes from institutional investors and Lesson 6: Watch the price and volume action.
Let’s continue.
Lesson 5: 75% of the market’s movement comes from institutional investors
The big professional investors have the largest influence on the market’s future direction. Institutional investors can be fund managers, banks, building societies or insurance companies. And if these 800 pound gorilla investors are buying, you can jump on to their coat-tails. And if they are selling, you can quickly switch out on to the sidelines.
Here is how it works.
Picture the market as a big tree. Let’s imagine the professional investors being woodcutters. If the professionals are selling heavily (you can see them selling their stocks by looking at charts) it is like them taking a cut out of a tree and this of course makes the tree or market weaker.
If they take too many swipes at the tree in a short space of time, what is going to happen?
That’s right, the tree will fall over. So when the tree or market gets weak because of excessive selling or cutting it sends you a red flag to say get out of the market. On the other hand, when the professional investors are buying heavily and in a short period of time, this makes the market healthy and extremely strong – and this is the time when you do want to be invested.
In Saturday’s blog I’ll be continuing to share with you the 7 lessons about how the stock market works with Lesson 6: Watch the price and volume action.
Find Out More
In the mean time if you would like to find out more about how you can make a million pounds through using an ISA, 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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