Have you ever noticed how investing is a little like vacation planning?
Each year, when you’re deciding how you want to spend your summer holidays, you think about how much time you have, how much you can afford, and what you can do to have a fun and memorable summer. Then, you call your travel agent and start packing.
Investing is similar. You think about how much time you have before you reap the rewards of your investments and how much you can afford to invest. Then, with the help of BeyondETFs, you decide what mix of investments you need in your portfolio to weather volatility. Making these decisions will help you reach your long-term goals. If you’re worried about market turbulence, you make sure you have an asset mix that helps protect you from it.
You may have noticed this year that the weather has been a bit peculiar… a little like the markets.
Some regions in The United States have seen lots of snow in February and March, others have experienced hotter-than-usual temperatures, and still, others have experienced extremely hot days followed by unusually cold ones. And of course the hurricanes. What’s going on?
You may also be concerned about the behavior of the markets – as if the weather wasn’t enough.
In this election year all the talk is on inflation, taxes (or no taxes per one candidate) and the role of tariffs in enabling or disabling ‘fair’ trade between nations. We’re still seeing volatility in stocks, sectors and even currencies. You may not feel completely confident about investing in this environment, and may have chosen to wait on the sidelines to see what’s going to happen.
You wouldn’t cancel your summer holiday plans just because of a little weird weather, would you? You’d miss out on all the fun!
You’ll be much more successful in reaching your goals if you stick to your plan. Trying to guess what’s going to happen from day to day makes you jump in and out of the markets. Market timing – or trying to time your investments only when the markets are going up – is more likely to have a negative effect on your investment returns.
In fact, attempts to “time the market” may be more like canceling your summer vacation plans because the forecast says ‘rain’.
When the weather is unpredictable, you prepare for it. You pack your raincoat and umbrella – and your bathing suit and sunglasses. And, when it seems as if the markets are going up and down a little more than usual, you prepare for that too.
How BeyondETFs helps.
First of all, because The Brockmann Method only analyzes the S&P 100, you can rest assured that these are the finest of all companies. That means they’re not quite as volatile as cryptocurrencies or small firms where unforeseen circumstances such as the sudden death of a founder or the FDA’s non-approval of a previously promising medical treatment substantially destroy confidence in that firm’s earnings potential, or limit the liquidity of a market for that firm’s shares (sellers can’t find enough buyers).
Secondly, it weights recent pricing trends (positive and negative) as the biggest driver of a company’s specific and instantaneous price momentum. That means, that as Boeing deals with the ramifications of a second plane crash of their newest aircraft design, like it did in 2019, the ranking of BA quickly falls into the Avoid Zone signaling to users that it is time to sell. And like the announcement of the offer from Disney to acquire certain assets of Fox at a 17% premium, Fox jumped to the top of the rankings until the deal was completed.
Since the S&P 100 encompass companies in every major segment of the economy – banks, airlines, telecommunications firms, technology companies, real estate trusts, hotels, consumer goods, food, pharmaceutical, insurance, energy, forestry and others – conditions that favor one sector over another also tend to improve the rankings of those participants in that sector. So for example, when interest rates began to rise last year, banks (who are usually the only beneficiaries of higher interest rates) jumped into the Buy Zone, or when the price of oil climbs, so does the rankings of major petroleum producers.
The Brockmann Method, at the heart of BeyondETFs is a self-regulating window into the investing world, designed for the retail investor. Users of BeyondETFs get the best available market insights into these trends and consequences, and since they’re each compared with every other possible trend and consequence going on for the S&P 100, they are as close to a predictor of future growth as one can get – without having a crystal ball.