Mats Bengtsson

To beat the market you need to cycle

Mats Bengtsson mib over the years

No single company will beat the index independent of time and market cycle

That is, even if the company is a good one, moving upwards in price like a rocket, the up move will finally slow down. Even if the company is doing something special, making it move a lot better than the index it belongs to, it will eventually become an established company and will not go against the trend forever.

So, even if you have found a good company, even if you have used it to make a lot of money on price movements or seen others make money on it while you were standing in the pits, do not lock yourself to trading only in that company and a few others for eternity. 

To beat the market long term, you will need to switch what markets and companies you trade

Finding the skyrocketing stocks is very profitable. Staying with a selected number of established companies will eventually mean you miss a number of rockets. Staying with your favorite companies independent of the current market cycle will have you trying to fight the cycles, and that is making it very hard for yourself to achieve success.

What you will need to do is to move in and out of different markets according to what cycle is currently advantageous, and move into new fast moving companies as the old favorites are shifting down into slower moves.

Shifting what markets and companies you trade gives you the needed advantage of a greater selection

As you may have heard, the stock market is believed to be bursting instead of trending. That means that it is very hard to find the profitable time to enter a certain stock or a certain index, since a lot of the move comes in a short time. You are likely to enter late, and comparisons show that many times a buy and hold strategy is more favorable.

The theory of buy and hold being favorable makes one certain assumption though: That you only trade few indexes, or few stocks. Instead of looking at the issue if it is possible to long term beat the index trading only few stocks or few indexes, I prefer to focus on the fact that if you trade a vast amount of stocks, the available selections make it easy to beat buy and hold. That is, if you are following a trading strategy that is statistically profitable, and do scan for stocks that fills the requirements instead of following a thin selection of stocks, there is a vast number of possible profitable trades every week.


Never trade stocks without having tested your system. In fact, most trading systems are not profitable if tested over many stocks. Full story...

Do not invest in heating equipment without having compared the alternatives, not only to current situation, but also to each other. Full story...

About me Mats Bengtsson | Mats Bengtsson Site Map | Privacy Policy | Contact me | | | ©2003 Mats Bengtsson