There is a famous cliff on the ocean in Acapulco where experienced divers jump into the sea. It is very dangerous because the water at the base of the cliff surges from a depth of 2 feet to 12 feet. The diver must time his leap so the water is at the greatest depth when he enters or he could easily be killed as many novices before him have been. Timing is the key.
This reminds me of the stock market where timing is also the key to wealth or poverty.
The ocean waves surge in and out against the cliff in short cycles. The tide moves in and out in longer cycles and is very predictable. When you look at Nature you will see there are relatively predictable cycles everywhere. We see day become night, the changes of the seasons and birth to death of our own bodies. Some changes are so microscopically small we cannot see them and others are so long we are not aware they are taking place. Everything has a season or a cycle. It is up to us to be able recognize it and use it to our advantage.
People ask why did the stock market go up (down) today? These short moves can usually be laid to some recent event. Then there are longer surges and regressions of months or a few years. We have bull markets and bear markets that seem to have historical cycles that last decades. These latter cycles run for about 16 to 18 years and move similar to the surges of the sea against the Acapulco cliff. A knowledgeable market timer will buy when the water is out (stocks look their worst) and hit the ocean (sell) as the surge is at its highest.
The ability to do this is NOT guess work. It is an understanding that cycles apply equally as well to the stock market as they do to the forces of Nature. Unfortunately, the principles to learn this very simple technique are not taught in college. Most must learn the method in the school of hard knocks. It can be very expensive.
In our recent bull market from 1982 to 2000 we had one of the predictable long cycles. The mindset of the public has become so hardened to the bull concept that they (and almost all brokers) have forgotten that each up surge is followed by a down surge of approximate equal length. This is not very comforting to current owners of stocks and mutual funds, but once they realize it they can do the prudent thing to protect their money - sell. Then they can buy U.S. Treasury bonds and wait for the next bull market to arrive. It is not very exciting to be in cash, but it is much better than seeing your money slowly disappearing before your eyes.
You must learn entry and exit of the stock market just as the divers in Acapulco have learned the correct moment to jump off the cliff.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
Airbnb cleaning service Arlington Heights ..One of the basic laws of physics states that a... Read More
Whenever I see mutual fund comparisons in the trade publications... Read More
Most people think the stock market is a zero sum... Read More
Over the past few months, several investment professionals have brought... Read More
Investors who exclusively use broadly diversified, no load mutual funds... Read More
Any online investor / trader seeks an excellent off or... Read More
Question: How does it get better when it gets worse?Last... Read More
You remember the story about the frog that was put... Read More
We all know the expression, "My country, right or wrong",... Read More
"Buy and hold" is one of the most heralded investment... Read More
When an individual investor wants to roll up his sleeves... Read More
In one of my previous articles (Investing in the stock... Read More
An investor can find and research the best stock on... Read More
Ever notice how behavior in one area of life can... Read More
The Dow Theorycharles h. dowcharles h.... Read More
Did you run out to buy that duct tape yet?... Read More
Just about now everyone is confused as to which way... Read More
We need a rabbit!This was a pretty horrible week for... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
Most stock market traders have a favorite technical indicator.The one... Read More
You probably know the story of Sherlock Holmes and the... Read More
What! Me worry?Many of you remember the cover of MAD... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
We learnt the following the hard way! If any of... Read More
When you stand on the ocean shore and watch the... Read More
reliable maid service Winnetka ..Sometime in the third quarter of 1997, someone told me... Read More
After finding the price of a particular stock, usually the... Read More
Very few people, even professionals, have heard of the Dalbar... Read More
How many times have you said to yourself, "I'd like... Read More
A PEG ratio cannot be used alone but is a... Read More
How many people went to a cash position this week?... Read More
A few years back ? it seems like an eternity... Read More
Every broker and financial planner will tell you that you... Read More
Before we get into all the good news out there,... Read More
On the 40 year journey through the turmoil of a... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
Financial markets provide their participants with the most favorable conditions... Read More
Every day in any financial publication you will find the... Read More
Three little pigs went to the market to stock up... Read More
Quick, look out the window. It's raining. No, the sun's... Read More
Humpty Dumpty had a great fall and all the King's... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
The following are a list of nine things you want... Read More
Over the past few months, several investment professionals have brought... Read More
Most stock market traders have a favorite technical indicator.The one... Read More
Yesterday I received my monthly issue of MONEY magazine. This... Read More
Mutual fund investing is a lot like Thai cooking. Everyone... Read More
Forget making a profit; instead focus on the income provided... Read More
Analyzing growth stocks is an important focus for any investor.... Read More
Stocks & Mutual Fund |