A question that we are both being asked is why are we buying stocks and not spread betting at the moment?
The simple answer is we had stocks for about 9 years which were all sold in the recent market decline.
Those stocks were mainly growth stocks and some were dividend plays.
The market has re-set and we now have cash in place of stocks – so we want to invest into stocks to build our portfolio once again.
Coming out of long term stocks and holding cash will always be the case if we go into a bear market and we did just that, be it briefly.
The more relevant answer, and mentioned by Javid on the webinars, is buying stocks right now is the best way to be in the market.
Our stock positions don’t have stops so will not suffer from pullbacks.
The market had its most volatile period during the turning point (which has been discussed on the webinars several times).
Since the turning point, volatility levels have still been high – but less than during the March 2020 lows (the chart sub-indicator shows volatility steadily declining).
But with volatility still being higher than normal tight stops will inevitably get hit and exit the trade during tree shaking.
With these stocks, we have not entered stops as this will accommodate for levels of volatility, tree shaking, intra-day noise and news.
It will allow for long term growth and dividends.
We are not looking for short term plays here, these are intermediate growth investments and dividend plays.
All of our trades to date since the recent bear market in March 2020 have been in the form of buying stocks.
When we get into momentum plays then we will look to enter through different vehicles.
The obvious level for momentum plays are 52 week highs but setups can obviously occur before then as well.
The stock evaluation is no different to what we do each day except with purchasing of stocks, we look for dips within trends to buy into.
Let’s go trade!