Where are we in the cycle?

That’s something I like to think about.

The reason is because it helps me allocate my time better. Should I be spending more time looking for stocks to buy, should I be spending more time looking for stocks to sell, or should I be at the beach because the market is a mess?

Being able to answer this question correctly can be a huge advantage.

I think blindly incorporating a specific type of strategy at all times, regardless of the market conditions seems awfully difficult.

If we can first identify what type of market environment we’re in, then we can pick and choose which tools and strategies are best fit for that part of the cycle.

Are we in a high volatility environment? Then why would we implement strategies that are best suited for low volatility environments?

Are we in a trending market environment? Then why would we use the tools and strategies that are best for sideways rangebound markets?

I think we first identify where we are in the cycle, and then decide how to approach the market from there.

We do this by weighing all of evidence. And to be clear, I mean all the relevant evidence.

So, are we in a new bull market or what? [Read more…]