Viktor - The use of TA, as applied in particular to investing in sector funds, is an extremely important and proven system of determining the most favorable sectors of the market, and the best times to buy, hold, or sell them. Of course, the fundamental study of the markets, economic conditions, and industry specific considerations are also taken into account, but TA is the best way to spot shifts in investor sentiment that make certain areas of the market more attractive than others. TA is also used to track the degree of enthusiasm that investors are showing for a sector, which will determine how fast its price may increase and how long it remains in favor. Once the buying slows, and begins to diminish, other indicators point this out, and at certain points determined buying a number of charting and momentum measurements, a sale and the locking in of profits is warranted. The indicators then provide information that assists in determining which sectors are then replacing the first one and are attracting the most investor attention.
These methods are of primary interest and use when one allocates a portion of one's portfolio to a Select Fund trading strategy. The long term portion of one's holdings, which is generally composed of a diversified selection of top quality funds, is generally structured for the least amount of trading possible. Funds are generally not replaced unless they begin to seriously lag others in their particular category or investment style, although one can also use TA to periodically exit and enter more diversified, traditional mutual funds, but this is usually done using longer term momentum and charting indicators than one employs with the concentrated, faster moving sectors.
The events in the real world cannot be excluded from one analysis. Shutting off CNBC, throwing away the Wall Street Journal, and relying strictly on charting and TA to make investment decisions may appear easy to do on the surface, but it is an impractical approach that can cause one to suffer due to the exclusion of important events in the real world.
At this time, perhaps for the first time in modern history, investors are facing the consequences of linking our economy, which is a tightly structured, transparent system that relies of accurate information and checks and balances, with those of nations where the decision makers are lacking the experience and knowledge, and where financial systems are unstructured and unaccountable, and where much of the information that is disseminated in either inaccurate or downright false. These countries have made mistakes that are causing them to take a step back and restructure things for the future. With the world evolving into a truly global community and economy, the errors of others affect anyone who is financially involved, as we have seen recently. Despite these mistakes, and allowing for the time needed to correct them, one cannot help but be optimistic about the future for the Asian economies, for example, where an incredible work ethic, love for education, and strong desire for success has already seen them progress from being prehistoric agrarian states to successful, technologically advanced manufacturing based economies. Once things are adjusted to make their future paths more secure, they will again be among the world's leaders in growth and invention, and the US economy will benefit enormously from the economic ties that are already in place.
Bernie |
