Wealth Building Strategies
Investors (and consumers) have a tendency to be attracted to that latest thing, they like “what’s new.” That might be fine for purchasing cell phones and flat screen television sets but it is not necessarily the best course of action when it comes to investing choices. Let’s find out why…. CLICK HERE to watch the video
The Evidence-Based Investor Video series is a service provided by Paul Philip and the team at Financial Wealth Builders Securities
Key Events In The Coming Central Bank-Dominated Week –
Last week it was all about the ECB, which disappointed on hopes of further rate cuts (leading to the Thursday selloff) but delivered on the delayed realization that the ECB is now greenlighting a tsunami in buybacks (leading to the Friday market surge). This week it is once again all about central banks, only this time instead of stimulus, the risk is to the downside, with the BOJ expected to do nothing at all after the January NIRP fiasco, while the “data dependent” Fed will – if anything – hint at further hawkishness now that the S&P is back over 2,000.
Here are the key upcoming events, summarized by DB’s Jim Reid:
“Russell, you’ve been dealing with the markets since the late-1940s. This is a strange question, but what is the most important lesson you’ve learned in all that time?”
I didn’t have to think too long. I told him, “The most important lesson I’ve learned comes from something Freud said. He said, ‘Thinking is rehearsing.’ What Freud meant was that thinking is no substitute for acting. In this world, in investing, in any field, there is no substitute for taking action.”
At the beginning of this year, I began discussing the technical weakness that was emerging in the markets. Since that time, the markets have remained under pressure leading to a continued cautious portfolio stance.
However, I have reiterated many times since then, interventions by central banks could change the shorter-term dynamic of the markets from bearish back to bullish. This past week saw exactly that as the European Central Bank not only intervened in the financial system but threw everything at its disposal at it. As noted by Ambrose Evans-Pritchard:
“Mr. Draghi pledged to flood the financial system with fresh liquidity for as long as it takes to keep the fragile economic recovery aliveand prevent a deflationary psychology taking hold, yet there was a sting in the tail.
Marc Ostwald, from Monument Securities, said the ECB has bet everything on one last throw of the dice. ‘It’s a kitchen sink job, but at the same time Draghi is saying there is a limit to what they can do, that this is it, and there will nothing more,’ he said.”
The majority of traders over-trade, over-analyze and generally make things way too complicated. The mystery of making money in stocks must have a deep and complicated answer, right?
Wrong.
After nearly 20 years as a trader, analyst, investment banker and money manager, I can tell you that what’s keeping most people from making money in the markets is largely a function of having a repeatable process in place and keeping it simple.
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