Always Play for the Winning Team
There always seems to be two sides to everything.
Any story can have two perspectives. Any sporting event has two teams. Even the stock market has two personalities: Bull and Bear.
And human nature usually leads us to believe that one side is superior to the other in any given situation… Only one side of the story can be true. Only one team can win. You can only make money by sticking to one personality of the market.
Naturally, people want to choose just one.
However, we both know that isn’t always the case, and when it comes to the stock market it’s dead wrong.
While only one team can win at a single time, what’s to stop you from switching teams to ensure your always on the winning side and always making money?
‘Absolutely nothing’ is the correct answer to that question. That’s the beauty of the market. You and I are free to take advantage of both bull and bear markets without any penalty or recourse.
It’s time to get rid of that old mindset that there is always a winner and a loser and, more importantly, that YOU have to choose to always be bull or bear. You can’t win them all, but you can certainly take advantage of both bull and bear markets in order to always be on the winning side.
Simply pick the team that’s winning…
It is really that simple. And picking correctly will greatly improve your chances of choosing winning stocks with the biggest returns.
If you are just pulling up to the field (market) you should have two jerseys in your hand. Let’s say one for the Bulls and one for the Bears. Now all you have to do is take a look at the score (overall market trend) and select who you would like to play for.
The score will be represented by the benchmark S+P 500 (SPX) as we can see above.
Despite some very recent fluctuation, you can see that it’s still very much on the bullish side. The Bulls are winning. So, what do you do? Simply throw on your Bulls jersey, leave your Bears jersey in the car and join in the game!
But don’t pledge yourself to one or the other.
While the bull market is treating your buys well and you are happy to play for the Bulls on a win streak, the Bears always make a comeback at some point. Always be ready to run to your car, replace the Bulls jersey with the Bears jersey and switch teams!
As the Bulls begin to lose with the market beginning to point down, you can continue to make money by shorting stocks and keep winning because you switched teams and play with the Bears now.
Now take a look at the Volatility Index (VIX) that we discussed in recent weeks.
Considering how the VIX shows us that the market is in the midst of a short-term correction, it’s a good idea to have the keys to your car in hand just in case this correction leads to the end of the bull market. That way, when the market turns around you will be ready to run to your car and throw on your Bears jersey.
Put the odds on your side by always playing for the winning team.
Charts from Stockcharts.com
