How Close Are We to the Next Market Crash?

FTMDaily.com – One of the most common questions we receive here at FTMDaily is about the timing of the “next” market crash. Obviously, many investors (especially those with sizable retirement nest eggs to protect) remember all too well how the last two market crashes wreaked havoc on their retirement savings accounts. But unlike most of our peers, we don’t make major stock market forecasts or predictions, as it is against our philosophy. No one can predict these markets. And I mean, NO ONE.

Every day, we receive dozens of forwarded emails, chain emails, and emails from well-meaning market prognosticators claiming to know which direction the market is heading. And they are all wrong — nearly 100% of the time. Instead of making silly predictions, we simply “follow the money.” That is, our system measures 10 major real-time market indicators every evening after the market’s close to determine current market conditions. Two of the most important measurements we take are the price and the volume action. One thing that astute market observers quickly learn is that the “big money” moves markets.

For example, just prior to the 1929 stock market crash as the average investor was plowing his money into U.S. stocks, the big financial institutions were selling. Anyone with access to price and volume information in 1929 could see this clearly. The same thing has happened on numerous occasions throughout the entire 20th century, and even into our modern era.

When it comes to our hard-earned money, we don’t speculate, or try to “time the markets.” And we never change our investment strategy based upon any guru’s latest prognostications. Instead, we follow the money. When the price and volume action show that the big money is pulling money out of the market, we pull ours out too. Inversely, when the data show the big money piling into the markets, we join in the buying.

This simple model has served us well for many years and even kept us — and many of our readers — out of the 2008 stock market crash!

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Proverbs 28:19-20

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