Continuing from part 2 under the same heading, MyFinopedia has developed the strategy where we use the gut that seeks to accomplish rewarding goals. Utilizing a systematic therapy that supplants pre-determined signs. The case study is that the bull- trending markets experience lower volatility and that’s the correct time when any investor loves to stay invested for as long as possible. Bearish trending markets struggle for higher volatility. The idea is to understand the system which does not require to miss every 5-10% of correction. The overconfidence that tries to tear this off results in overtrading and under delivering. This was followed blindly in 2008 where stocks dropped 30-50% and all the market players, be it huge or small, should try to avoid this scenario. No one can ever time these factors and considerations perfectly but should work on the goal to enjoy most of the good escalations.
The next question that arises is that Why should long-term investors be alert about up and down trends?
Mind it that any evidential awareness allows an investor to be confident about a wide panorama of possibilities, not betting on any unit predetermined outcome. The most important thing to understand about downtrends is that they open the paths to a wider frame of happening outcomes, and can be non-happening as well.
When markets start plunging, investors stampede, which leads to a broader distribution of results, which doesn’t always mean it will take towards awful market crashes. Contrarily, tail risk always exists and which brings fewer corrections or bear markets from bull markets. But movement tends to be more when markets are in a bearish situation because of its human mentality that often makes irrational decisions when losing.
The strategy followed is the shifting of stocks to high-quality bonds when markets hit the lows. The evergreen goal is to manage risk and help investors survive deepened market downfalls.
It’s high time to understand, that time helps set the correct expectations. It remits the probability of surpassing but calmly understands that this is about expelling mistakes investors make at the time of thundering markets. The research trend points towards the system which tends to give congruent returns to a buy and hold angle but with a different volatility contour.
This hypothesis of tactical asset allocation seems to be profanity to many long-term investors but in reality it’s not. The propagators have always told less is more, cost does matter, and markets always reward over the long-term.