Written by: Angela Akers

The Federal Reserve ended their July meeting Wednesday with an announcement that interest rates would remain at current levels. While this move was expected, what investors really wanted to know was when/if and how many cuts we could see this year and the Fed delivered. In the news conference following the meeting, Fed Chairman Jerome Powell remarked, “The broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate” and that it could be “as soon as the next meeting in September.” It was good news for investors amid tepid economic data on housing, jobs and manufacturing. While the news was immediately well received, the excitement faded.

However, as seasoned investors know, no matter what the market’s reaction to the Fed’s news, positive or negative economic reports, and earnings beats or misses, the main objective investors have is to find the best way to consistently make money in the stock market. This means portfolio appreciation, both by keeping your profits and making new money. At VectorVest, we believe that to consistently make money in the market, you must have a trading plan. To make money and protect profits, every trading plan should contain three vital steps; When to Buy, What to Buy and When to Sell.

Although the pros and the talking heads are always telling us to buy, buy, buy, we must be willing to cast aside conventional wisdom and understand that there is a time to buy stocks and a time not to buy stocks. Market direction is the single most important thing that any investor needs to know as everything will follow from that. Dr. David Paul used to say that trading with VectorVest gave investors an edge. The “VectorVest edge” is trend following. VectorVest follows the market’s trend and provides investors with unique and totally objective Market Timing Systems. Once you have determined your risk/reward tolerance, ie. your investment style (for more information on Investment Styles, please refer to Chapter 12 of Dr. DiLiddo’s little green book, Stocks, Strategies & Common Sense), the Market Timing System that is congruent with that style will answer the question of When to Buy.

In the aforementioned Chapter, Dr. DiLiddo said, “A key to becoming a successful investor is in recognizing your investment style and buying stocks which are consistent with that style.” Later in the Chapter, he describes strategies that you can use based on your risk/reward tolerance, helping you determine What to Buy.

Determining When to Sell is a personal decision. One which VectorVest believes should be made before actually buying a stock. While selling is a personal decision, we give our subscribers many tools to help with this decision. A simple, conservative approach is to follow the VectorVest Sell signal. VectorVest calculates a stop-loss level for every stock in the database, every day. When a stock’s Price falls below its Stop price, you will see the VectorVest rating move to a red Sell rating. While you may use the Sell rating as guide or as gospel, please don’t ignore it. However, there are, of course, other ways of deciding when to sell which include applying trailing stops, percentage stop losses and moving average crossovers to stocks. All of these features or abilities and more can be done easily within VectorVest.

For those of you who depend on VectorVest to do the work for you (and who wouldn’t?), VectorVest released the Trading System Viewer, TSV, (found under the Viewers tab) in January 2020. The TSV addresses When to Buy, What to Buy and When to Sell for each trading system displayed. The Trading System Viewer contains over 50 trading systems, which cater to all types of investors. Therefore, you can easily adopt one of these trading systems or use VectorVest tools to create your own. In this week’s “Special Presentation,” Mr. Chappell will highlight an already proven trading system, illustrating the benefits of using the VectorVest edge.

While developing a trading plan is essential, following your trading plan without hesitation is more important.  As Dr. Paul used to say, “it’s Vital To Your Success.”

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