ClusterGains

Fortunes were made in the 1990s when the computer, internet, and cellphone revolutions were going on.  Technology was the theme of the era.  People were constantly having to upgrade their computers for more memory or better software, and many were buying computers for the first time.  This constant buying of tech products made millionaires out of early investors in Microsoft, Intel, Dell, and Cisco.

The big theme since 2002 has been commodities because China, India, and other countries are trying to catch up with the rest of the world for a higher standard of living.  It takes a lot of raw materials for new buildings, roads, power, and cars.  It also takes a lot of oil for new power generation and new vehicles.  Then, since the easy oil has already been used, this puts an extra amount of upward pressure on the price of oil.  The demand is greater than the supply at times.  So, fortunes can be made by investing in oil companies which are finding new oil.

Gold is another theme that has emerged in the past several years.  Again, the emerging countries are wanting more jewelry and the finer things in life.  Also, since the financial crisis of 2008, there has been an added interest in gold because paper currency is no longer trusted.  The price of gold has risen four times higher in the last decade, and many gold companies have gained over 1000% in value.  Finding quality gold companies is another way to make a lot of money in the new millenium.

Trading stocks based on chart patterns and cycles is a timeless theme that can be used to make money in the stock market.  The gains are not immediately as great as the multibagger stocks above, but small gains can be made often enough so that a person could make 50 to 100% each year by using trading techniques.  

One technique is to buy a quality ETF or stock according to its current price trend.  If an ETF like GLD (chart link on right column) is going up, you should own the stock until it peaks.  Then, buy a gold short ETF like DZZ for pullbacks in the price of gold.  If you can make 5 or 10% on each cycle, you can easily make more than 50% each year.

How do you know when the up or down cycle is about to end?  Low volume in trading, rounded tops, and flat bottoms are some clues here.  Another chart form to watch is a wedge.  If the up and down price swings of a stock are getter smaller and smaller like the end of a cone, there is a lack of buying or selling interest in the stock.  A trend reversal is about to take place.  So, you should buy a long or short position on the stock or ETF according to the direction change.  The MACD line may also confirm the new direction for the stock.