6. Trading Strategies

I read somewhere that the average working life span of a stock investor is 16–17 years. That is 17 years from his first year as a professional investor to when he retires, gets promoted to management, or busts out. It occurred to me when I read this that the market itself changes character every 16–17 years as well. It travels in long upward trends for 16–17 years and then changes to a generally flat trend with very wide oscillations. For example, the market began a long upward trend in the mid-1980s that ended in 2000. Since then, the market has been generally flat with oscillations in 2003 and 2008 of 60% or more. Figure 6.1 shows these changes in character over the 90 years between 1920 and 2010. I point this out to show ...

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