New Normal, New Game Plan

I look at charts all day. Short-term stock price charts. Long-term economic indicator charts. And everything in between.

Colleagues also email me charts throughout the day, asking me to “take a look…” The thing I find most interesting about these charts is the timeframe… almost none of them go back further than 2009, when the current bull market began. (Harry is the exception to this… he sends me charts that go back centuries!)

The thing is, looking only a few years back is a mistake. Here’s why…

Let’s answer the question: “What has the stock market returnrned since _______?”

I’ll fill in the blank with four different dates:

1) March 2009
2) May 2007
3) October 2002
4) March 2000

If you look at this chart of the S&P 500 going back to 1999, you’ll see I did not pick these dates at random…

See larger image

So to answer that question, “what has the stock market returnrned since____?,” let’s see…

Answer #1 (since March 2009): the S&P 500 has returnrned 126%

Answer #2 (since May 2007): the S&P 500 has been flat (gain of 0%)

Answer #3 (since October 2002): the S&P 500 has returnrned 96%

Answer #4 (since March 2000): the S&P 500 has been flat (gain of 0%)

This isn’t just a “lost decade” – as the 0% gain from 2000 to 2013 would suggest – it’s a murderous one!

Retail stock investors notoriously enter and exit the market at precisely the worst time (in hindsight) because they become confident at market tops, like in 2000 and 2007.

And investors become overly pessimistic after significant declines, like in 2002 and 2009… leading to hasty exits from the market.

This type of market – where the market moves up and down, but makes no net progress – is disastrous for long-term “buy-and-hold” investors. And that’s why most have turnrned their back on this outdated investment methodology.

They’re right. There is a better way…

Subscribers of Boom & Bust have access to my model portfolio. This is where I make recommendations to go long and short investments that show clear trends… trends that should persist for a year or more.

And, in my new trading service, Cycle 9 Alert, I hone in on the hottest sector trends poised to beat the market over the next two to three months. We’re progressing well with our beta-testing of this service and will let you know when we’re ready to launch.

If you haven’t done so already read the Survive & Prosper issue on “Volatile Sideways Markets…The New Normal.”