Market Commentary for December 2019

"Fully invested and 2019 trading results... "

By Alan Hull

This commentary is in part or entirely created using extracts and comments from my weekly Blue Chip Report. For more information about the Blue Chip Report, including subscription details and a recent sample report, go to Blue Chip Report

Markets run in ebbs and flows. Sometimes they are volatile, sometimes they are predictable, sometimes they are fearful and sometimes they trend. All of the different strategies we employ will work (at some point) and then they won't work. This is our lot in life as investors and sometimes we need to simply step away from the markets and be content with leaving our money in the bank.

But when the markets are running we need to be in them and making the most of an opportunity that we know won't last forever. This is a Christmas rally and I believe it is a precursor to a U.S. Presidential election rally in 2020 and I am fully invested in it. The long term chart of the SP-500 index tells the story as it has undoubtedly begun to rally again. The sign posts are never more obvious than they are right now...

A U.S. Presidential election rally occurs when an incumbent President is running for re-election, such is the case with President Trump in 2020. And strangely enough in almost every instance going back to the 1950s, the U.S. Stockmarkets and economy have been outperforming...an interesting statistic. Anyway, it is what it is and my role as an investor is to capitalise on it.

We are also in the very late stages of a global bull run that began back in March of 2009. This is also a big clue as to what tactics we should be applying in 2020. The start of a bull run is typically a stock pickers market. Only well informed, seasoned investors are buying in the early stages and they will be very selective, relying heavily on fundamental analysis. This is where value investors come into their own.

Then there is the middle rally which is the broad advance. The more cautious investors see the market rising and this helps them to overcome their fear. So the market is joined by more and more investors and we see more and more stocks start to rally. To participate in this phase requires less skill and will take stocks from bargain prices to premium prices. This rally ends when the value investors start to take profit.

The final rally (or lemmings phase) is where non-investors finally capitulate and buy stocks as well. The market goes up because the market is going up and fear of missing out (and ridiculously low interest rates) drives the masses into the Stockmarket. They buy name brand stocks like Apple and Microsoft because this is all they know. They have no real understanding of these businesses but if their neighbour owns Apple and the price has nearly doubled in 2019 then they must own it as well. Price feeds on price.

Of course the latest fad is ETFs and so the masses will buy these...along with some outperforming blue chip stocks. And so that is exactly what I am doing because it's times like this that it pays to follow the crowd. What's more, the U.S. is outperforming our local market and so we should be exposed to the U.S. using index ETFs. This is very easy and you can do it right on your Commsec account, just like buying BHP or CBA. So happy days and welcome to the Christmas rally.

Knowing the right tactics to apply at any given time is what my investment education is all about. I start by teaching you how to trade and invest...wax on, wax off. What is the difference between income and growth investing. Asset allocation, capital allocation and investing in property as well as shares. And the cornerstone of long term success...risk and money management.

Then we move on to the bigger picture with economics & politics and how they drive the financial markets. Then all this stuff becomes a precursor to understanding how Stockmarkets really work and picking the right tactics at the right time. So how did we do in 2019? Well we identified the ActTrade newsletter as the best strategy to use this year and one student who used it exclusively (not recommended) achieved a return of 54.4%.

The average return for all the students who traded in real time during 2019 was 20.5%. This result was achieved over an 8 month period. But I think 2020 is going to be even better and I still have places available in both Melbourne and Brisbane. A lot of the content is available online and I'm offering a very attractive discount if you want to bring along other family members as well. Our mission is to provide products and services to DIY investors and this is centred on our education program.

So to receive the full information email on my 2020 course please send a request to me using my contact form