This question isn’t so easy to answer as it was several years ago. For the past several decades, investing in the stock market has been a no-brainer. Just pick a well-balanced selection of blue chips and stay in the game for the long term. This has been the best stock market trading strategy because of the overall bullish trend.

This in no longer the case.

What virtually everyone has ignored was the underlying reason for bull market. It isn’t the fact that the stocks increased in value, it is because the dollar has lost more than ninety percent of its purchasing power since the creation of the Federal Reserve. With the advent of fiat money, the slow erosion of the dollar gave the perception of steady growth. Those who go long on the dollar were the fools so why not invest? Mutual funds became one of the best stock market trading strategies because it hedged risk but the really folly was thinking that the value derived from the market and not the falling dollar.

There is a platitude uttered by the holy men of Wall Street and that is to “Buy value!”. As if a trader ever tried to do otherwise. While it is a free stock market trading strategy, it could hardly be considered useful. There is something know as “systemic risk” and it is the inherent risk association with investing in the stock market. So one could conclude that if he didn’t invest then he could avoid the risk. Truth be told, if you are a participant in an economy there is no way to avoid “systemic risk” when you get paid in dollars.

The successful stock market strategy is to know from where that value is derived. Had people been truly aware of the falling dollar then they would not have put so much faith in stocks and deride the gold bugs. Bernie Madoff has taught us a lesson and that manipulation is alive and well, it always has been. The only real hope that a trader has is to have a hawk’s eye when it comes to technical analysis. Leading indicators will give you a warning. If this is too much work then something with intrinsic value is a safe bet (commodities, gold, silver, etc.) but only look to preserve your capital i.e. hedge against the falling dollar.

Sadly, there are as many stock market trading strategies as there are people who want to be famous for recommending them. Instead of buying value, preserve value. Don’t let your capital erode. Any advice to the contrary is untenable.