The markets always offer a Yin or a Yang. A buyer & a seller. A difference of opinion and this is what creates opportunity.
The problem is that psychology does a great job of interjecting into your logical thinking – doing everything it can to wrong foot you. This is why it is so important to understand your own psychology and understand the framework through which you view the market. It is also important to understand your investment objectives and time frame and ensure your decision making adheres to your investment strategy.
By having a structured investment framework of thinking you can minimise the effect that making emotionally based decision can have. This was a fundamental driver for us to produce the “Calnan Flack Economic Action Plan”. The plan provides a framework for our thinking. Understanding this framework allows investors to view market action with some level of expectation.
The current action in the equity markets has seen some very violent moves – unsettling many investors. Making them question the basis of their decision making. The markets are a sea of red. The VIX (Volatility Index) has spiked on a wave of emotion and the news is “grim” for investors.
However, how should our framework be shaping our thinking? Our three basic macro models are screaming find the opportunity in these market declines. Corporate profits are increasing and the real estate & credit markets are behaving almost picture perfect for a repeating cycle.
We know that 2015 is marked as a Pt C PANIC on Gann’s Financial Timetable.
We also know that the 5th year of the Decade historically ends higher than it starts.
Our macro overarching framework; the “Calnan Flack Economic Action Plan for Investors” places us at Action 2 within the cycle. Our Action Point 2 clearly states “
- Grow real estate portfolio as investment markets rise
- Continue to build your share portfolio on market declines
Our advice would be to make unemotional decisions and to look for the opportunity that this decline creates to further grow your share portfolio.
Cheers, Ian and Jeremy