This is a well-structured guide on contra investing in ETFs, offering both clarity and actionable insights. Here’s a refined summary and additional observations:
Contra Investing in ETFs: A Strategic Overview
Philosophy:
Contra investing focuses on leveraging market corrections and inefficiencies, requiring a disciplined, data-driven approach with the support of courage, conviction, confidence, and cash.
Investment Strategies
1.RSI-Based Strategy:
•Buying Opportunity: Target ETFs with a weekly RSI < 50.
•Profit Booking: When weekly RSI > 70, book partial profits (10-20%) if held for at least 1 year.
2.RNJ-Based Strategy:
•Buying Opportunity: Select ETFs where weekly RNJ < 50.
•Profit Booking: When weekly RNJ > 90, book partial profits (10-20%) after a minimum holding of 1 year.
•RNJ Formula: RNJ = RSI + (ADX Positive - ADX Negative).
Operational Guidelines
1.Investment Frequency:
•Weekly or fortnightly, aligned with your financial plan and risk tolerance.
2.Portfolio Diversification:
•Cap any single ETF exposure at 15% of the total portfolio.
•Reduce investment frequency (e.g., monthly) for ETFs nearing this limit.
3.Market Corrections:
•Lower thresholds for buying/profit booking during corrections to capitalize on favorable valuations.
Core Principles for Success
•Discipline: Stick to predefined criteria; avoid emotional decisions.
•Patience: Allow investments adequate time to grow.
•Consistency: Invest regularly, irrespective of market sentiment.
Current Market Update
With market improvement over recent weeks, opportunities for buying ETFs have diminished, but conditions are favorable for partial profit booking. This aligns with the principle of gradually locking in gains while maintaining a value-driven approach.
Conclusion:
This strategy helps investors navigate market fluctuations, ensuring a methodical approach to building a resilient ETF portfolio. Happy investing!
Contra Investing in ETFs: A Strategic Overview
Philosophy:
Contra investing focuses on leveraging market corrections and inefficiencies, requiring a disciplined, data-driven approach with the support of courage, conviction, confidence, and cash.
Investment Strategies
1.RSI-Based Strategy:
•Buying Opportunity: Target ETFs with a weekly RSI < 50.
•Profit Booking: When weekly RSI > 70, book partial profits (10-20%) if held for at least 1 year.
2.RNJ-Based Strategy:
•Buying Opportunity: Select ETFs where weekly RNJ < 50.
•Profit Booking: When weekly RNJ > 90, book partial profits (10-20%) after a minimum holding of 1 year.
•RNJ Formula: RNJ = RSI + (ADX Positive - ADX Negative).
Operational Guidelines
1.Investment Frequency:
•Weekly or fortnightly, aligned with your financial plan and risk tolerance.
2.Portfolio Diversification:
•Cap any single ETF exposure at 15% of the total portfolio.
•Reduce investment frequency (e.g., monthly) for ETFs nearing this limit.
3.Market Corrections:
•Lower thresholds for buying/profit booking during corrections to capitalize on favorable valuations.
Core Principles for Success
•Discipline: Stick to predefined criteria; avoid emotional decisions.
•Patience: Allow investments adequate time to grow.
•Consistency: Invest regularly, irrespective of market sentiment.
Current Market Update
With market improvement over recent weeks, opportunities for buying ETFs have diminished, but conditions are favorable for partial profit booking. This aligns with the principle of gradually locking in gains while maintaining a value-driven approach.
Conclusion:
This strategy helps investors navigate market fluctuations, ensuring a methodical approach to building a resilient ETF portfolio. Happy investing!
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