We’ve looked at four. Read on for our take..
Lime green is good in the short to medium term, thanks to low trading costs, low volatility, and low correlation with other assets.
Red is better for more long-term returns.
It’s the best indicator of volatility, meaning a market that moves rapidly with little consistency may move less frequently over time.
A red indicator can be volatile enough to move up or down.
A green indicator moves fairly predictably, meaning it doesn’t move in lockstep with the market.
A purple indicator moves at the level of the market rather than below it.
Gold is probably the best way to go long, because of its high correlation to other assets; a low correlation means a smaller likelihood of an eventual change in value.
It’s also a good indicator of future returns because it usually moves in line with the markets.
A blue indicator works equally well, but it’s more likely to lag in the distance.
Silver is a very good indicator for long-term returns because it’s cheap and generally less volatile.
Low volatility means that silver’s short-term movement tends to be relatively stable, but it’s a lot more volatile in its long term.
Platinum is a great indicator for long-term returns because it’s one of the best-traded metals; it moves quite predictably. It’s also a great indicator of volatility, meaning a market that moves rapidly with little consistency may move less frequently over time. A purple indicator can sometimes get locked in.
The best foreign exchange markets are probably the Asian economies, since they move so predictably. Many emerging markets are also good indicators. For example, Canada’s and Australia’s indexes are both above 150 for a long time.
Another popular indicator that’s a bit more volatile are emerging markets, both because of the relative low volatility and because the trend there is not as steady as it is with currencies. Here’s an indication for the next three months.
China has a high correlation with other assets and is a high-risk indicator. It often does not move in lockstep with the economy and is only a little more easily traded than gold and silver.
South Africa’s benchmark has a low correlation with other indexes and is also a high-risk indicator. It frequently does not move in lockstep with the economy and is not a good indicator of the long-term
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