I am hearing predictions by brokers, financial planners, talk show hosts and the talking heads on TV that the market is going back to its old highs - DOW 11,700 and NASDAQ 5000 here we come.
It seems to me that in 2000 I heard these same people saying there was no top to the market and were looking into their crystal balls for DOW 30,000 or some other fantastic number. Suddenly the market turned over with the DOW dropping 3,000 points and the NASDAQ losing 80% of its value. Can it happen again? I don't predict and all I can say is the market can do anything.
BUT what if it does turn down? Are you going to sit as you did before and watch your money disappear? Right now everything looks rosy and the momentum is carrying the indexes higher almost every day. Buy and hold is the right strategy.
Hind sight is always 20/20 and you will want to own stocks and mutual funds now, but not get caught in the next down draft. There will be one! There always has and you can see it clearly if you are a student of market history. Since 1900 there have been 16 to 18-year cycles of bull and bear markets and within those there have been other shorter cycles of ups and downs.
Many brokers and investors try to predict when those turns will occur and they are mostly wrong. It is definitely not a good idea to try to outguess the market. You must learn to read the rather obvious signs of the major turns. I say obvious, but it is clear they are not obvious to most brokers or financial planners. Having been a professional trader, exchange member and floor trader for many years I will tell you the obvious 'secret'.
Using a 200-day moving average of any one of the major indexes (I prefer the S&P500) you can plot these every day and when the index penetrates the 200-day line in an upward direction it is a signal to buy. That is where we are now. Inversely when it penetrates that line going down it is time to sell and put your money in cash or bonds. If you don't want to do the math computations there is an excellent chart in the Investor's Business Daily newspaper called their Mutual Fund Index that will do all the work for you.
It is nothing more complicated than that and you can go back into history as far as you wish and you will see it proven time after time. You are holding stocks or funds while the market is going up and you are in cash while it is going down. Don't be fooled by "research" or by any other complicated method. This works.
There is no need to predict the market. It will tell you in simple language what it is doing and whether you should be a buyer or seller.
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
Lincoln Stretch rentals Alsip ..One of the most believed bits of conventional wisdom from... Read More
Professional stock options traders use the term lean to refer... Read More
If you are a baby boomer, time is not on... Read More
In November of 2000 when the NASDAQ was trading at... Read More
Whenever I see mutual fund comparisons in the trade publications... Read More
Have you bought any mutual funds this year or late... Read More
You may have wondered why your mutual funds have been... Read More
There is no question that the stock market is being... Read More
No, this is not a symbol for some Latin number.... Read More
Minority Report the movie may not be far off if... Read More
The thinking process of the brain relating to the... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
You'd have had to be living on a desert island... Read More
Let's assume that you want to make some serious money... Read More
Do you have a financial planner? Does one of your... Read More
Have you ever thought of investing? Do you have a... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
On the 40 year journey through the turmoil of a... Read More
Are you attracted to the idea of being in control... Read More
Ever notice how behavior in one area of life can... Read More
Reach in your pocket and take out that big roll... Read More
If you're like many investors who squander those small dividend... Read More
There are many important things you need to know to... Read More
Let's hope you did not have any of the Enron... Read More
People are always asking me when should I sell my... Read More
Western Springs shuttle limo ..Should the market turn against you, it is important that... Read More
Reach in your pocket and take out that big roll... Read More
Investing in long-term financial vehicles give you the most gains... Read More
I don't know what kind it is, but I saw... Read More
Being wrong is OK, but let's not carry it to... Read More
The demand for world oil is increasing while world reserves... Read More
No, this is not a symbol for some Latin number.... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
When the stock market is going up and all your... Read More
You remember (they show it on TV every year) the... Read More
This is the continuing story of our two imaginary traders,... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
Let's go into the details of why non-indexed mutual funds... Read More
Well, not really. What I mean is I don't mind... Read More
What can I expect to make my first year of... Read More
One of the great "secrets" of successful people is discipline... Read More
This is a rather simple strategy with which I am... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
Now where have I heard that before? I know. It... Read More
It is commonly reported that the stock market averages about... Read More
One of the basic laws of physics states that a... Read More
The following are a list of nine things you want... Read More
Maximizing a stock market investmentThere are several factors an investor... Read More
If you're like many investors who squander those small dividend... Read More
You may have wondered why your mutual funds have been... Read More
Stocks & Mutual Fund |