Liquid Millionaire - isaco

Stephen Sutherland
the market is in. Is it healthy (uptrend) meaning it is safe to invest or is
it unhealthy (downtrend) meaning you should be out on the sidelines in
the safety of cash?
Th e best way to determine the overall trend and direction of the market
is to follow, interpret and understand what the general market averages
are doing every day. Th is is the most important lesson you can learn.
In his bestselling book, How to Make Money in Stocks, William O’Neil
said: “Don’t let anyone tell you that you can’t time the market.”
According to O’Neil, the erroneous belief that no one can time the
market evolved more than 30 years ago when most funds that tried it
were not successful. Th is is because they had to buy and sell at exactly
the right time but due to their asset size problems, it took weeks to
raise cash and weeks to re-enter or get back invested into the market.
Th erefore, the top management at these funds imposed rules on their
fund managers that required them to remain fully invested (95% to
100% of assets). 92
If you want to make big money in investment funds (or stocks) over the
long-term, you must observe and study the major indexes carefully. Here
they are:
• Th e Nasdaq Composite
• Th e S&P 600
• Th e S&P 500
• Th e Dow Jones Industrial Average
As well as watching these four indexes, the action and behaviour of
the highest quality stocks (the leaders) is also a key indicator of future
m a rke t d i re c t ion .
By studying these four indexes plus the action of leading stocks–each
and every day, you will come to realise meaningful changes in the daily
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