I’m starting to get a reputation in this industry for talking a lot about my market indicators. From my “Two-Minute-Tuesday” weekly update videos to normal conversations with clients, I somehow always revert the discussion back to the indicators.
It’s time to reveal what my indicators are.
First, let’s clean up a major misunderstanding. The indicators I use are not on/off switches. I don’t have a flash-in-the-pan indicator that says, “Hey last week the president tweeted this and that, which will most likely be well received by the markets. So, you need to go all-in, Mr. or Ms. Client.”
My indicators don’t work that way. They’re not on/off switches. They can’t tell us to get out before something terrible happens. (Even though in the past they’ve signaled potential trouble looming and were pretty much right on target.)
What my indicators do measure is the level of risk in the market. When several indicators show a very bullish (offensive) or bearish (defensive) posture, there's a potential for some sort of impact on your investment portfolio or 401(k) at work.
I monitor both the indicators and the charts of the investments we own every single day. It’s important to remember that my indicators are telling me the threat (or risk) level. The markets can go up when the risk is high, and down when the risk is low.
As investors, we have to be hyper-sensitive when the market is moving up in a defensive period, or a period where there is “high” risk. In that sensitivity, we need to think about our potential exit plan and the kind of strategy will we employ to protect our clients’ profits on the way down.
At Balser Wealth Management, I have short-term, intermediate-term and long-term indicators. Short-term indicators, as you might guess, are changing on a week-to-week basis. Intermediate-term indicators are a little longer, and our long-term indicators are just what the name implies.
Using these indicators, I try to paint a broad picture for my clients of what the market is telling me, using these short-term, intermediate or long-term scenarios.
You may be surprised to know that the charts I use have not one piece of information on them that shows where a particular company had a bad quarter or when the overall economy was bad. All that’s on my charts are prices, dates and columns of X’s and O’s. They go up and down based simply on supply and demand.
My indicators are extremely helpful and I rely heavily on them on a daily basis. (Feel free to look me up if you’d like to see one in action!) But remember, these indicators are not an on/off switch, but more like a dimmer switch.