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Every investor would love it if there were one way of knowing whether to invest more or get out of the stock market. Unfortunately, we don’t have crystal balls that predict the future. That leaves many people wondering how to know when to get out of the stock market and when to get into it. While we may not be able to see the future here at Mullooly Asset Management, we do have a strong group of indicators that allow us to make informed investment decisions. Tom and Brendan discuss these indicators in this week’s Mullooly Asset Management podcast.
Tom explains that we use a “dimmer switch” approach to investing at Mullooly Asset Management. Meaning money moves into and out of the market in increments based off our indicators. Three groups of market indicators factor into our investing methods. These are short term, intermediate term, and long term indicators. All of these indicators contribute to our overall approach when buying or selling investments. Some investors might wonder how to know when to get out of the stock market or when to get into it, but these indicators give us clear signals.
Tom and Brendan discuss the different indicators next. They begin by explaining that short term indicators can move on a daily basis. They are mainly used to determine entry and exit points in the market. Short term indicators don’t play a huge role in the bigger picture for long term investors. However, sometimes the short term indicators roll over into the intermediate term and make some noise. There are eight different intermediate term indicators. They don’t all have to move at once to make a difference though. Sometimes just one intermediate term indicator can change the market. Typically they will change in bunches over the course of a few weeks. When this happens it can signal that action may be necessary. Especially when the intermediate indicators begin affecting the long term. Long term indicators are most important to the big picture. When long term indicators change it is a big deal.
Here at Mullooly Asset Management we use this “dimmer switch” approach to investing because it helps us avoid being too bullish at market tops and too defensive at market bottoms. While other investment managers wonder how to know when to get out of the stock market, we have a clear plan of action that gives us real signals. We utilize them to help our clients make money.