Step 1 – Market Trend Analysis

The first step in making confident decisions is identifying important market trends. Its not “market timing” that is important. Its being in the market at the right times… and out at the right times.

Many investors bypass an analysis of the overall market and go right into trying to find hot stocks to buy. They feel that stocks of fundamentally sound companies will go up regardless of the market’s trend. This approach can be a costly mistake. At times, the price movement in the overall market can encompass all stocks. For example, most would agree that Apple Inc. has solid fundamentals and; therefore, believe the stock should make money regardless of the over riding trend of the stock market. Why, then, did the Apple’s shares drop by more than 50% in 2008? Answer: Because the market trend was negative in 2008.

You may be a whiz at picking stocks, but if you enter the market at the wrong time, your results can be disastrous. Think back to the years 2000 or 2007. Even acclaimed stock pickers who bought in 2000 or 2007 suffered major losses.

At the same time, you can have inadequate stock-selection skills, but if you enter the market at the right time, you will enjoy desirable results. Novice investors who entered the market in the early stages of a new bull cycle in 2003 or 2009 enjoyed desirable results.

The IEI offers courses to teach you how to identify important market trends, and then provides you access to our proprietary indicators so you can keep your portfolio in line with the prevailing trend. You will learn how to identify long, intermediate and short-term trends, with a special emphasis on the intermediate-term trend or the bull/bear cycles. You will learn how to identify bear cycles such as the one that began in late 2007 and bull cycles such as the one that began in early 2009.

Once you can identify the important market trend, your confidence will skyrocket. You will be able to build your wealth during bull market cycles, while also preserving your capital during bear market cycles.

Step 2 – Sector and Asset Class Analysis

Once you know the important market trends, your next step in making confident decisions is isolating the leading asset classes and sectors to own. During bull market cycles, you want to make the most of the opportunity the market is providing by owning the strongest asset classes… the leaders during that market cycle.

Passive investment strategies suggest you diversify in various asset classes to protect you from risk. Blind diversification strategies like this will only lead to mediocre results because you will own some of the weakest asset classes along with some of the strongest.

The IEI offers courses to teach you how to isolate the leading asset classes, and then provides you access to our proprietary indicators so you can keep your portfolio in the leaders during any market cycle. You will learn how to use our proprietary asset class ranking system, asset class indicators and sector relative strength charts.

Studies at the IEI prove that investments held in the top ranked asset classes outperformed investments in lower ranked asset classes by as much as 15 times over a 12-year period! In fact, owning the top ranked asset class since Jan 1, 1998 produced a profit of more than 1620% (read four-thousand percent), while the S&P 500 was up only 19% in the same period. During bull market cycles, owning the leaders will build your wealth at a rapid clip, help you achieve security in retirement and enjoy life.

Step 3 – Selecting Stocks and Exchange Traded Funds (ETFs)

Once you identify the important market trends and isolate the leading asset classes and sectors to focus in, your next step in making confident investment decisions is to select individual stocks or ETFs that give you exposure to the leaders.

Most stocks and ETFs in a leading asset class will advance, but some will lead the group while others will follow. Your security selection can make the difference between performance that you could live with and performance that will help you “live it up”!

The IEI offers courses to teach you how to drill down in any asset class, global market or sector to find the strongest stocks and ETFs to own. We also provide you ongoing access to our research database, which will simplify your stock selection, streamline your research efforts and help you stay on top of the market. You will learn how to use point & figure charts, a forgotten tool, yet the most amazing trend following method you will ever find. You will learn how to use stock relative strength charts to identify and choose the relative strength leaders.

Our Sector Universe Reports allow you to query any universe to find the stocks leading the charge. You will also get ongoing access to our research database, which will simplify your stock selection, streamline your research efforts and help you stay on top of the market.

Step 4 – Manage Your Portfolio and Risk

After your portfolio is established, the final step in making confident investment decisions is to perform a continual follow-up of steps 1, 2 and 3. The market is a dynamic mechanism that could change after your portfolio is established.

Remember, its being in the market at the right times… and out at the right times. The Market Trend Analysis may have been positive when you entered into your positions, however, if the trend changes, you want to change with it.

It is important that you keep your sector and asset class selection up with the times. The sectors you chose six months ago, for example, may not necessarily be the leaders for the next six months. Using our proprietary asset class ranking system, asset class indicators and sector relative strength charts will help you keep your proactive portfolio humming with the top performers while removing the laggards from your allocation and keep up with the changing market conditions.

At times, even if your market and sector analysis is accurate, some stocks or ETFs you select may disappoint. During bull market cycles, one of the benefits of proactive investing is keeping your portfolio working in stocks and ETFs that are participating in the market’s advance. In addition, when market cycles begin to change, you need the right information and tools to know how to manage each individual position held in your portfolio.

The IEI offers you a number of tools to help you manage and monitor your holdings to help you stay a step ahead. The point & figure charts help you understand the important trend and the relative strength charts will help you measure the strength in each position you own. The Portfolios section of our database helps you stay on top of all your positions with a proprietary rating system to help you maintain a portfolio of winning stocks and ETFs.

Your risk can extend from market or sector conditions, or from specific company risk. Continual follow-up of steps 1, 2 and 3 will help you identify risk, wherever it may originate, and help you know when to make proactive changes. Using this four-step approach will help you handle any market condition with the confidence in knowing you have a plan to operate and a solid investment discipline.