Novice Traders' Notebook  |  SEP 1999

Multiple-Indicator Techniques For Index Funds by Andrew Abraham

Multiple-Indicator Techniques For Index Funds Traders expect uncertainty in the markets; it comes with the territory of trading. But with the Standard & Poor’s 500 hitting new highs after a gut-wrenching decline, is there more uncertainty today? Here’s a set of multiple-indicator procedures for trading an index fund, complete with historical examples. We have all heard market experts advise us to be long-term investors. However, if you began investing in 1973 or 1929, could you have held on long enough to earn a profit? It took approximately 25 years to reach levels seen prior to 1929 and approximately 12 to reach levels seen prior to 1973. Japanese investors have been waiting for a return to the highs of 39,000 seen in the Nikkei only a few years ago. While everyone should participate in equities, prudence is always warranted, because anything can happen. As easily as the Dow Jones Industrial Average (DJIA) could go up to 25,000, it could also go down to 5,000.

by Andrew Abraham