Using a Barometer For Investing in the Stock Market
The Barometer idea is used in the market and happens when a security or investment is used as an indicator for the trend of something else like the economy or stock market.
I think that finding barometers is a great idea, and it will give you an indication of what will happen next if you choose the proper indicators.
If we were to graph unemployment rates for instance, you would find that as unemployment continues to rise the stock market trends down.
It's a good idea to try and keep track of a few benchmark Barometers to use when you start investing so you have an idea of how one indicator affects another.
I personally think unemployment is one of the best indicators for predicting what the general stock market will do next.
One of the best things you can do to make money in the market is watch these trends like unemployment and make your investing decisions when Wall Street isn't paying attention to them enough.
For instance sometimes the general market might rally and have a 3% gain or more, but in the long run if unemployment is rising and the economy is failing then the market eventually will fall as well.
If you had made your moves as the market was rising when it shouldn't have been, you have a better chance for making money investing in the stock market.
There are things you could have done using the scenario stated above such as short selling stocks, buying funds that do the inverse of the market, or buying commodities that tend to go up when the market goes down.
There are other indicators you can use to predict the trend of something else.
Other indicators people frequently use are actually companies themselves.
For instance retailing companies that have discount retail goods have actually been doing better since the economy has been going down lately.
So you could form a rule that the worse the economy is doing, the better discount retail and grocery companies will do.
You must be careful with comparing a trend to another but if you find the right trend you can't go wrong with your future predictions.
I think that finding barometers is a great idea, and it will give you an indication of what will happen next if you choose the proper indicators.
If we were to graph unemployment rates for instance, you would find that as unemployment continues to rise the stock market trends down.
It's a good idea to try and keep track of a few benchmark Barometers to use when you start investing so you have an idea of how one indicator affects another.
I personally think unemployment is one of the best indicators for predicting what the general stock market will do next.
One of the best things you can do to make money in the market is watch these trends like unemployment and make your investing decisions when Wall Street isn't paying attention to them enough.
For instance sometimes the general market might rally and have a 3% gain or more, but in the long run if unemployment is rising and the economy is failing then the market eventually will fall as well.
If you had made your moves as the market was rising when it shouldn't have been, you have a better chance for making money investing in the stock market.
There are things you could have done using the scenario stated above such as short selling stocks, buying funds that do the inverse of the market, or buying commodities that tend to go up when the market goes down.
There are other indicators you can use to predict the trend of something else.
Other indicators people frequently use are actually companies themselves.
For instance retailing companies that have discount retail goods have actually been doing better since the economy has been going down lately.
So you could form a rule that the worse the economy is doing, the better discount retail and grocery companies will do.
You must be careful with comparing a trend to another but if you find the right trend you can't go wrong with your future predictions.
