Ask Colin

How much weight do you give to the US market in deciding market exposure in your trading strategy?

The long form of the question was:

Just a little question that has been nagging in my brain.

It seems that the USA market is now showing all the signs of being in phase 3 of the bull market, ... while it seems that the Australian market is in phase 2 of the bull market.

 Given the effect of  USA market and all  other markets (witness the GFC) how do you take this into account with your trading strategies?

 I guess I am asking what weight do you put on non Australian markets when determining how much of your capital to invest?


It is not legal in Australia for me to give specific advice, which is by definition when a particular person asks for a view about the market. So, I cannot go there. With respect to the rest of your question:

You are asking about my trading strategies. I do not have any trading strategies because I am an investor, not a trader.  

As far as my market exposure strategy is as an investor, my investing plan is set out in detail in my book Building Wealth in the Stock Market. I also teach the way I think within that plan in my weekly market and portfolio journal, which you have ongoing access to. However, that will be of minimal use to you, even if you were an investor, rather than a trader. 

At the heart of your questions are similar issues to that discussed in the answer I posted to the website last night under Entry Strategy. Even if I had a trading plan, it would be irrelevant to what your trading plan should be and only you can know that and have to work it out for yourself. The benefit in that lies entirely in the thinking you have to do. It is not the answer (there is no right answer anyway), it is the process that brings deep understanding of all the issues and how the various parts of your trading plan interact. Only then will you truly have confidence to carry out your trading plan under pressure in the market. 

Enjoy the journey – it will be difficult, but very rewarding. There are no short cuts or external answers to trading or investing problems.