Changing Markets and Investors' Choice: Leaving the Age of Just Keep Bying Behin

Changing Markets and Investors' Choice: Leaving the Age of Just Keep Bying Behind

Since 2008, global financial markets have had a golden era of literally "rising." With the Fed's easing monetary policy and low interest rates driving long-term gains, the market has constantly seemed to send a message to investors: "Just keep buying." Simply buying and holding steadily has allowed them to earn huge profits, and many investors have followed this strategy to experience stable asset growth.

But over time, the wind of change began to blow. While the post-pandemic market recovery was stronger than expected, the subsequent long downtrend in 2022 came as a sign that the Just Keep Bying strategy was no longer a universal one. The Fed is no longer easily propping up the market, and it has launched a hard-line rate hike to contain inflation. In other words, the safety net called Fedfoot is gone. The "rising" market that investors were used to is gone, and now a cyclical market in a real sense has arrived.

So what's different from the past? The overheating caused by low interest rates is now cooling off, opening a new cycle of clear ups and downs. Here, the Just Keep Bying strategy no longer seems safe. The longer and deeper the downtrend, the more painful it can be to simply hold out. After all, a new strategy is needed to survive a changing market. And that's where the value of the trend pursuit comes back into the spotlight.

Trend follow-up is more of a philosophy that flexibly responds to the flow that the market tells us, than just an investment method. This strategy, which keeps up with the trend when it rises and protects assets quickly when it falls, can exert great power in an ever-changing market environment. For example, when the market enters a downtrend, a trend follow-up strategy can reduce losses and protect assets. Rather than just jumping on the rise, a flexible positioning approach that follows the direction of the market requires new capabilities that were not needed in the previous era.

After all, in a changing environment, what all investors need is a "flexible response," not a "buy." The current market has moved away from the era of U.S.-China economic cooperation that was symbolized by the "China America" of the past, and the Fed is no longer a shield for investors. Entering an era of inflation and high interest rates, the bubble has ballooned, and now the possibility of it bursting has become thick. Markets continue to cycle, challenging investors. Amid these changes, investors cannot survive on simple strategies, and the agility to read and respond to trends is essential.

Of course, these ideas may only be personal. This is just an insight that came to mind while looking at the long-term chart. However, this intuition will serve as an important compass for the investment journey ahead. We need wisdom to be flexible in responding to trends in the era of Just Keep Bying, and it will begin the process of finding the true investor's path.

It's an era where you can't just live.