I just posted an interview I did with David Skarica about several stock and ETF situations we are either watching or involved in now. To listen go here.
Now there is no sign that the US stock market is on the verge of a giant drop. It took a hit in February and went sideways all summer. There were some warning signs during that sideways churn, but support held and by August the market began to rally through its highs.
I think the US market can rally towards the end of the year, or at least continue to hold support in an overall sideways to uptrend.
Does that mean now is the time to invest?
I got an email asking me that:
Hello,I was wondering if you knew where the stock market will be going in the next couple of year or two? Do you believe we will have a recession or just a decline? I’m try to figure out if I should invest in mutual funds now or if should invest when the market goes down. Thank you.
The answer is that my indicators really have a six-month forecasting ability. That’s about all I can look out in the future and beyond that, it is all pure guessing
So I can’t tell you what the US stock market is going to do in two years.
What does allow you to invest and expect to hold for years is getting in early on a cycle turn, but this bull market in the US stock market began in 2009.
So I’m not really thinking myself that this is a great place to put new money to work in the US stock market to expect to just hold for years. I own some long positions, but I put mental stops on them and do not think I’ll be holding them for long beyond this year. I also have some short positions so if the global markets dump and suck down the US stock market they will help offset the losing positions. But we’ll have to see what happens.
If you talk to an investment advisor they will almost certainly tell you now is a great time to invest in US stock market funds, because they always say that.
In reality, you need a plan if you are going to put investment money to work in the US stock market of diversifying so that when it falls you won’t get hurt.
I take two approaches to the market – one is trading and one is investing.
When it comes to investing I like to buy something that I believe is going to go up for several years.
To do that though you need to get in EARLY in a bull market and not nine or ten years after it started.
Take a look at the S&P 500.
In hindsight, the best time to invest would have been in 2009 AFTER the 2008 stock market crash when there was a recession and all of the news was bad. That doesn’t mean that the stock market can’t go up next year, but it will eventually go into a new bear market so you need a plan when you buy it.
I use stage cycle analysis to decide on what I want to invest in to try to hold. And to do that I like to invest in things that look like they are at the end of stage one or at the start of their stage two bull market.
When I do that the S&P 500 is obviously not in stage one or early in stage two
But there are things that could line up in the future.
Right now one such thing is Turkey.
No one talks about investing in Turkey, because it is going through a crisis and is a disaster just as the US economy was back in 2008.
But most big bear markets last over a year and often two to three years.
The Turkey bear market started this summer.
So it’s something I’m looking to invest in later – but I’m watching it and studying it now.
At some point, I plan on investing in Turkey stocks.
And I would also add agriculture commodities as something in a big bear market too and gold now turning back down to a long-term support made two years ago as places that will be interesting to put new investment to work in the coming months.
With the US stock market, I honestly have zero interest in buying it as an investment with new money and thinking I’m just going to hold forever until it has another big bear market.
I know to say that makes some people angry, but I consider the positions I have in it trading positions that I may sell one day.
If you are interested in trading grab my book The Two Fold Formula, because it is about the single best trading pattern that I have ever used.
To get it click here.