Look Out The Window
Quick, look out the window. It's raining. No, the sun's out. No, it's cloudy. Wait a second, it is changing again, but I can't tell what it is going to do.
Kinds like the stock market. Up one day, down the next, then goes sideways. That stock I bought is not acting right. Maybe I should sell it, but I'll wait another day. My broker (the weatherman) says it will go back up.
At the beginning of every year we hear stock market forecast (whether we want to or not) and every one of the "experts" is about as accurate as our TV weatherman. Be sure to take your umbrella. Every year the Wall Street Journal surveys more than 50 economists and every year about 1/3rd of them are right. A weatherman can do better than that. The analysis of these birds seems impeccable and when you hear them speak so confidently you are sure they are right. He must be right - he's a broker/economist/financial planner and they know everything. Well, at least a lot more than I do - maybe.
Having owned a brokerage company and hired about 300 brokers I can assure you they don't know any more than you do. It just sounds that way. The one question you should always ask any broker before you give him your money is if he had a winning year last year. The market was down overall about 25%. If he lost more than 5% you don't want to know him. And if he says he made a bundle you had better question him carefully and ask for proof.
For the last 3 years almost everyone lost money. But this year it will be different. My broker said so. Only once before did it ever go down 4 years in a row and the odds of it's happening again are astronomical. Now that's logic for you. If you want to know what the weather is you look out the window. This same logic goes for the stock market. It is going down except for brief periods. As long as the major trend continues it would be wise NOT to buy anything.
Now that President Bush has given us his "stimulus" package and the Democrats have countered with theirs I wonder how long they are going to fight over how much and who gets what. It could be months before we see anything definitive from Washington. And that means you and I won't be getting any relief until then.
Tell those guys in the Beltway that it's raining and we need an umbrella - NOW!
Al Thomas
Author of "If It Doesn't Go Up, Don't Buy It!"
Never lose money in the stock market again.
http://www.mutualfundmagic.com
MORE RESOURCES:
 |
|
|
RELATED ARTICLES
Zero Sum Game
Most people think the stock market is a zero sum game because there is a buyer for each seller and seller for each buyer so each cancels the other and everything is equal. Not quite.
Staying Sane While Wall Street Crashes
Everybody is riding the Wall Street Roller coaster. Even if you are not invested, the headlines scream out one word: PANIC!It's hard not to join in the panicking.
Trading Stocks -Never Forget About A Past Trade
We all know that emotions control every decision that an investor makes in any type of money related vehicle. Whether is be the stock market, real estate, art work or antiques, emotions ultimately set the final price on both sides of the transaction.
Protectionism
First let's see what protectionism is. According to Mr.
The Great Stock Market Secret
When the stock market is going up and all your stocks and mutual funds are making money you feel like a genius. It is too bad that some folks don't remember what happened in 2000.
Nest Eggs and Omelets
Do you have a nest egg? You know, a place you are stashing away money for the future - retirement, down payment on a house, the kids education. That kind of thing.
Trading as a Business
What can I expect to make my first year of trading?We get questions like this one quite often. We find that most aspiring traders don't have a clue as to what to expect from the market.
How To Make, And Keep, Money Trading Stocks
If you are serious about making and keeping money by trading stocks, then there are three things you need to do, and do well.Money managementOrdersTrading systemMoney managementMoney management comes first.
Investing in Stocks and The Game of Monopoly
To begin, you might look at playing the stock market as though
you were playing a game of Monopoly. That's right; for playing
the stock market 'game' is not unlike playing a game of Monopoly.
Long Term Financial Vehicles
Investing in long-term financial vehicles give you the most gains but it also puts your funds at greater risk. There is much truth to the saying, "there is no gain if there is no risk".
Financial Crime
Congress recently passed another new law that is supposed to outlaw financial crime. Corporate officers will be sent to jail for "cooking the books" as it is called.
Evaluation I
An insane person cannot evaluate an insane evaluation system.As you know I have been trying to restore sanity to the insane premises Wall Street has been teaching its brokers and you for all these years.
What To Buy?
Now that you have some money burning a hole in your pocket and the stock market is going up you have decided to buy some stock or maybe a mutual fund, but you have the momentous decisions to what to buy.At this point you have three decisions to make besides which equity to buy:1.
A Funny Thing Happened on the Way to the Stock Market
On the 40 year journey through the turmoil of a volatile stock
market I've noticed "P/E Ratios," "Consensus Estimates," "
Bull and Bear Markets," stock ratings of 1, 2, 3, 4, 5, star
ratings of 1, 2, 3, 4, 5. Also, stock ratings of "buy,"
"strong buy," "sell," "hold;" stock rankings of "market
perform," "market outperform," "market underperform," "market
underweight," "market overweight," "market equalweight," and
"market neutral.
War Market
There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally.
Never Fall In Love!
Recently I watched my favorite football team lose a vital game.I simply love this team.
Dont Buy Stocks based on P/E Ratio alone
I use the P/E ratio as a secondary indicator for buying and selling stocks but I don't use the ratio in the same a manner as many value investors teach. I will explain the difference in my methodology for using the P/E ratio to your advantage.
Using Sector Funds to Construct Diversified Mutual Fund Portfolios
'Sector funds are too risky.' 'I doubled my money with Fidelity Select Technology in 12 months!' 'Avoid sector funds.
Selling Strategies - Setting a Stop Loss
Sometimes the best way of lowering exposure to risk is not to invest at all! However, when we make the decision to jump into the muddy waters of the stock market, its always a good idea to have a life jacket ready, just in case.We all have stories of that "must have" "can't lose" stock that looking back, we didn't really need to buy, and it definitely lost.
Analyzing Growth Stocks: An Important Focus For Any Investor
Analyzing growth stocks is an important focus for any investor. This is especially important, since stocks are an irreplaceable part of any good investment plan, and since unbiased stock research is hard to find.
|