Liquid Millionaire - isaco

Stephen Sutherland
before real weakness develops. Lightning fast action is critical to ensure
you do not give back your hard-earned gains.
Unless you are able to get in and get out of the market at the right time,
you will have diffi culty making headway. You or your adviser might be
able to pick the best fund in the world but unless you get in sync with
the market’s trend, the fund will not achieve the returns you desire.
But if you master the art of determining future market direction, you
will have learned the secret code that can open the vault to unlimited
wealth. Getting in sync with the market is not easy and takes countless
hours of practice, taking many years to master. However, knowing the
basics about how the market works is going to be of great benefi t to
you.
It’s All about Supply and Demand
Just like the property market, the stock market works on supply and
demand. Using the property market as an example, house prices, as you
know, go up and down in value. Why is it that property prices rise? In a
word, demand. Why do they fall? Th e reason is oversupply. Th e level of
supply and demand is determined by confi dence.
If there are high levels of confi dence and optimism, more people will
look to buy. But when confi dence is low, people do not want to buy and
will therefore be more inclined to sell. When there are more sellers than
buyers, prices drop. When people do not want to buy, prices have to drop
until they reach a price level where confi dence is restored. If houses sell
quickly, it means there is demand and this in turn forces up prices. If
houses sell slowly, it means that there is no demand or oversupply and
that in turn forces prices down. Th e stock market works in the same way
as the property market. It’s all based on supply and demand.
It’s Time to Get Excited Again
Contrary to popular belief, it is not Joe Public who make up the majority
of the market’s daily trading volume. As you learned in Chapter 5, it is
134