3 Risks Investors Are Facing Right Now & 2 Charts That Should Ease Your Stock Market Panic

Investors should remain disciplined and continue to plan their work and execute their plan amid the current market uncertainty.
Three key issues are highlighted for consideration, focusing on year-end tax loss harvesting strategies.
Tax loss harvesting can offset capital gains taxes and help preserve portfolio value, especially for short-term gains.
Caution is recommended as the visibility of economic and financial information is limited. Avoid information overload to maintain clarity.

Today’s daily chart suggests we split into two groups:

Traders who buy stocks and
Investors who buy companies

I want you to take a break and prove you’re not a bot.

Remember the old phrase: Plan your work and make your plans? Please keep it up. Understand that there are three things you need to consider at this time.

At the end of the year, professional and private investors are looking for tax loss harvesting.

Tax loss harvesting is the capital gains tax levied on the sale of profitable assets to compensate for the timely sale of securities at a loss. This strategy is commonly used to limit short-term capital gains, which are generally taxed at a higher rate than long-term capital gains, in order to preserve the value of an investor’s portfolio and reduce taxes.

At the moment, we are still operating without financial and financial data. I try not to overload the senses by looking at so much information that I’m a deer in the headlights and can’t decide which direction to take.

For economic data, I look at the Conference Board’s Index of Leading Economic Indicators. Currently, this is their press release:

« Note: Due to the US federal government shutdown, all other data from The Conference Board Employment Trends Index™ (ETI), The Conference Board−Lightcast Help Wanted OnLine® Index (HWOL Index), The Conference Board Leading Economic Index® of the US (US LEI), and The Conference Board Global Leading Economic Index® (Global LEI) data may be delayed. TCB will continue to publish when updated US federal data is released. »

The last report was on September 18th and it was down 0.5% at that time.

This is a trader’s market, not an investor’s market. Algorithmic trading has taken over a large part of trading. Algorithmic trading (also called automated trading, black-box trading or algo trading) uses a computer program that follows a defined set of instructions (algorithm) to make a trade. The trade can theoretically generate profit at a speed and frequency that is impossible for a human trafficker.

These are things that should concern you, but you have to understand that they are things that are beyond your control.

Today I offer two charts. The first is my typical daily chart and the second is my long term investment chart. In both charts I use the Vanguard Total Market ETF (VTI).

The first diagram is simple. I look at price, Trend Seeker, 20, 50, 100 and 200 daily moving averages and volume:

As you can see, even though we are currently in a downtrend, we are still only about 5% off the 52-week high of $339.06. I personally make big moves in my portfolios when we are more than 10% down to the previous 52 week high. Most traders I know have chosen one of these four daily moving averages as their favorite stop-loss trigger.

The second chart uses the same Vanguard Total Market ETF, but now uses weekly data with price, a weekly Trend Seeker, and a 50-week moving average:

Again, this is a chart I use for businesses I want to hold for the long term. As long as their revenue and earnings are growing and haven’t fallen below their 50 week moving average, I’m waiting.

In summary: We live in a time when we should be concerned, but not panic. View the stocks you are trading on the first chart and the companies you are investing in on the second chart and keep your predefined stop losses in place.

Trade and invest rationally, not emotionally, and you’ll be fine.

As of the date of publication, Jim Van Meerten had no position (directly or indirectly) in any of the securities mentioned in this article. All the information and data in this article is for your information only. This article was originally published Barchart.com

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