Several years ago I sat down and figured out how much money I would need to retire comfortably. Not extravagantly but as I am now.
The number I saw literally shocked me and depressed me. The numbers seemed unattainable.
Then came the dot com crash. I hadn’t got caught up in the internet bubble. The valuations on companies that had no earnings made no sense to me.
One thing at the time stood out. I kept hearing “This time is different.” If you learn one thing from me today let it be turn tail and run any time you hear this because it is absolute crap.
Ultimately this time is never different. I did not own any dot com stocks but still my retirement account took a hit. I vowed to not let that happen again.
When I graduated college I moved to Chicago to work in the futures industry. Futures give commercial interest a much needed way to hedge their exposure in the cash markets.
Anyway I started learning something called technical analysis. There are mainly two types of analysis, fundamental and technical.
Fundamental analysis is long term in nature and if try to trade futures based on fundamental analysis you had better be a commercial or have a huge trading account. I was neither huge or a commercial therefor I studied technical analysis.
Technical Analysis was more suited to the short term moves of the futures markets. After a few years of break-even trading I realized I did not have a large enough account to trade futures. It occurred to me that I might be able to improve the returns on my retirement account if applied some of what I had learned trading futures.
The first roadblock I ran into was a restriction many mutual fund companies put on accounts. Many mutual funds restricted the number of times you could trade in and out of a particular fund in any given year.
Perhaps this is one of the reasons ETF’s were developed. ETF’s are essentially mutual funds that can be easily traded through a brokerage account.
The mutual fund trading restriction turned out to be a blessing in disguise. If it had not been for this restriction I would have been over-trading.
Instead I was forced to look at the longer term picture of the stock market. What was going to happen over the next 3 to 6 months? I had to stay in trades a little longer than I had previously.
I was looking to catch as much of the long-term trend as possible without jumping in and out of the market excessively.
What I have come up with over the last several years is several systems I follow that allow me to catch the bulk of the bull moves in the stock market.
These systems have increased my returns while reducing stock market exposure. I knew I was onto something when I managed to avoid the bear market of 2008 entirely and bought back in