Mario Roberts author of Discovering The Pattern, claims in his book that market corrections occur almost like clockwork and in this coming year is no exception.
In his book he challenges the old “buy & hold” method and describes how you can leverage these corrections which typically would hurt your portfolio by simply being out of the market when they are likely to occur. And from the chart above we can see that the predictions in the book still are holding true even to this day.
The chart above is from 1993 to today and shows two huge historical market corrections that happened, it also shows the four classic indicators used by technical traders to predict the market direction and that they are showing up again in 2016 that there is a BIG market correction that is going to happen sometime soon.
From what you can see in the chart the last correction we had was in2008 – 2009, when the market fell 53%, the previous correction before that was in 2000 – 2003 and the market fell about 47%, same indicators like the Stochastic, MACD and momentum all show signs of a downward trend. However, a more then average volume needs to occur for a change in direction and that has not happened yet.
What is amazing to see are these huge market corrections all happen around about the same time in the year as mentioned in his book.
This seams hard to believe since each correction that occurs happens for completely different reasons for example, in 2000 it was the dot com bubble in 2008. It was the financial market and toxic loans put on the stock market, but what about today’s market?
There is plenty of talk about bad debts with Greece and Brazil as well as the whole slow down with China’s market growth there is plenty of events that can bring this house of cards crashing down. When I ask Mario Roberts how he can predict these years ahead he simply replied “History repeats itself, it’s there in the data”.
But what if you could take advantage of this information not only to stay out of the market to avoid the downturn but actually make money on the down turn using shorts?
A short is an investment product where you make money by speculating that the market becomes bearish. In Mario Roberts’ the book (Discovering The Pattern) he gives plenty of investment products that can make you money when the market is bearish and actually shows you the weeks that the market is typically bearish, the average return and the probability of success all based on historical data.
In either case with the uncertainties in the market and the indicators triggered we are certainly in for a rough ride in the coming years and if you plan on retiring soon maybe the “buy & hold” method might not be the best choice.
If you are interested in learning more about the alternative to the buy & hold strategy you can find out more at these locations.