2008 has come and gone and here it is 2009. Most investors are glad to see 2008 behind them and look forward with optimism to 2009. Since this is the beginning of a new year, let’s reflect on overall performance for 2008, which turned out to be a disastrous year, third-worst year in more than a century, for most investors of our generation. Many investors are angry and confused. They are hoping for a turnaround in 2009, but considering the pain that has continued for more than a year, they are reluctant to bet on it. It was the DJIA worst year since 1931. The broad S&P 500 did even worse, down 38.5% for 2008, its worst year since 1937. However, those of you that followed the Exponential Moving Average (EMA) Trading Strategy were kept out of harms way. On January 8, 2008, the EMA strategy turned bearish; and investors should have switched from equity investments to money market instruments. By implementing this strategy on January 8, 2008, investors would have kept intact 35% of the their investment capital (1/08/08 S&P 500 at 1390 and 12/31/08 S&P 500 at 903). In other words, for every $100,000 invested as of January 8, 2008, one would have $65,000 as of 12/31/08, as measured by the S&P 500. Ouch!!!
At some point, the stock market will hit bottom and move higher. Some experts believe it happened in November. Others believes stocks will decline again and won't bottom out until later, perhaps some time in 2009 or 2010. From my perspective, that is the beauty of following the price trend and, of course, the EMA Trading Strategy. I will let the price action of the market decide when to redeploy financial assets back into the equity market.
Next week, we will look at our EMA Trading Strategy along with some individual ETFs that may have significant profit potential for 2009.
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