Trendinvestor Evolution - Phase Two
By 22/06/2009 after surviving a very brutal bear market rally, that morphed into the start of a new bull market, giving me very substantial losses. I knew it was time to try and “tidy & cleanup” the system, to knock off and polish its rough edges.
Here was a system that had now worked very well over the last 14 years through two bull markets and also two bear markets, for me it was proven and had produced substantial financial gains
It was obvious throughout 2007 & 2008 that the Federal Reserve which is neither Federal or a Reserve ! were going to stop at nothing to stem the decline including in your face money printing, in frankly vast quantities.
This was providing artificial demand to the markets, which would probably lead to shortened bear markets and larger bull markets all denominated in a currency that is constantly deflating in value or purchasing power. To take an extreme example the Turkish stockmarket rose by 2.2 Million Percent in 2002, but the currency lost 2.5 Million Percent over the same period.
So although my two signals to go short on 26/12/2000 and 29/02/2008 had worked very well, we are now in different and frankly more desperate times. So i took the decision that when the next go short signal comes along, i would instead move to an all cash position, or maybe Gold
I also worked on delineating normal corrections from the much rarer primary trend changes. I actually made the system slightly less sensitive, for me this was not a problem as i was already working on Phase Three