What makes stocks such a fantastic investment? The S&P 500 returns 10% every year on average. As a result, investing in stocks is one of the most stable long-term investments outside of the real estate, yet it comes with none of the problems and obligations that come with owning property.
Stocks are wonderful retirement investments since your stock portfolio may expand enormously over time. According to the “Rule of 72,” a shorthand for measuring how long it takes an investment to double, an investment in the S&P 500 should double every eight years on average (assuming a 10 percent raise each year, as is its average). This is one of the reasons why so many retirement accounts include equities—and why the earlier in life you start investing, the better.
- You don’t have to be psychic to be smart.
You don’t have to try to forecast every market move, up or down. You just need two items. A realistic set of expectations is one. Understand that because we can’t see into the future, we won’t be able to capture the very tops or very bottoms unless we’re lucky. Rather than dreaming about eliminating losses, aim to keep them manageable.
Second, devise a methodical approach to reviewing the investments you own (this is more important than watching market indexes). Concentrate on facts rather than emotions, and respond logically to new information as it comes in. And this isn’t the Dutch Tulip craze of the 17th century. It’s the information era, therefore new information will always be available to you. Being methodical (which is a good thing) is not the same as being strict. It is OK to supplement your “system” with common sense.Read more on stocks reviewed post on Chaikin prediction.
The Chaikin Power Gauge ratings and the way they are displayed on Chaikin Analytics provide you with the tools you need to stand safely on relatively high ground (not necessarily the peak — let’s be practical here), and wave “bye-bye” to erstwhile high fliers as they continue to careen down and lower. Power Gauge is a 20-factor model that combines all of the factors that influence how stocks behave. Power Gauge incorporates value and quality/business risk, which is consistent with what many quant models do.
However, the majority of criteria are based on the investing community’s future predictions (growth). The latter is frequently overlooked by traditional quants since it is difficult to quantify. But it’s significant. That is why anyone would prefer equities over less risky fixed income. (To view all Power Gauge stock factors, go here.) Power Gauge assigns a seven-point scale to stocks and ETFs, ranging from Very Bullish to Very Bearish. For the sake of simplicity, I’ll refer to the ratings as they appear on Chaikin Analytics: Green (Very Bullish or Bullish), Red (Very Bearish or Bearish), or Yellow (three varieties of Neutral).