Stock Trend Investing

During January 2011, the S&P 500 gained 2.3%. The Trend Signals for the S&P 500 are all still the same as last month. They all indicate that the direction of the long-term trend in the S&P 500 is “up” at this moment.

If you consider stepping into the market at this moment, please remember that this “up” trend is going on already for a while. When you enter the market in smaller steps, you limit your risk in case the trend turns around abruptly.

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    Sun Tzu teaches us in the Art of War about the basics of Trend Investing

Sun Tzu was a Chinese military strategist in the 6th century BC. He wrote the famous book “Art of War”. The book has 13 chapters, each dedicated to a different aspect of warfare. What has this to do with outperforming the stock market, you may ask.

In Chapter 10, Sun Tzu gives us the answer: “He who knows when he can fight and when he cannot, will be victorious.” This quote has been the secret behind how also you can outperform the stock market.

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The return of the S&P 500 over 2010 was good: 13%. However, the annualized returns of the S&P 500 for the last 3, 5 or even 10 years are very poor. Just buying and holding an S&P 500 index fund does not make financial sense. However, with trend investing and long-term market timing, investing in the S&P 500 does start making sense.