SMCI - Cracking the Code: 5 Reasons a Choppy Market Looms | Benzinga
Trendless Markets are an Investor's Worst Nightmare
Over my two-decade active investing career, I have learned valuable lessons by studying my trading history extensively. In looking back at my investments and the investing environment when I made the investment, I learned unsurprisingly that my best results came during bull markets (defined by the S&P 500 Index trending above its 50-day moving average). Because about 75% of a stock's performance is correlated to the general market's direction, the results of my post-analysis make sense. However, the most surprising takeaway from my historical study of my trading history was that I did not lose the most money in bear markets. Instead, the biggest drawdowns in my equity curve occurred during trendless, choppy markets (as defined by the S&P 500 Index stuck between the intermediate-term 50-day moving average and the long-term 200-day moving average.)
Don't only take my word for it; listen to two investing juggernauts from completely entirely different eras:
Jesse Livermore, who amassed his massive fortune during the Great Depression crash of 1929, warned of trendless markets by saying, "There is a time to go long, a time to go short, and a time to go fishing."
Similarly, Ed Seykota, a trend following ...