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

Writen By : Al Thomas

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks

There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally. When it looks like shooting will begin momentarily the market takes a dump. What should you do with your stock, mutual funds or cash that is waiting to find a home?

Back when I was a floor trader we had a saying ?When in doubt get out?. And that applies just as strongly today to everyone whether you area professional trader or a retired person living off your equity income.

You might say that I am not a trader or speculator so I won?t do anything. Let me clarify what you really are. You are a speculator whether you want to admit it or not. The only thing that separates you from the floor trader who is scalping for a few ticks and someone who has thousands of dollars in a retirement account is the time frame. If all you do is buy and hold you still are a speculator. You are hoping the market will come back. Your broker told you so.

What your broker did not tell you is that long-term bull markets are followed by long-term bear markets of equal length. Because we have been in a long-term bull from 1982 to 2000 the mindset of the investor has become conditioned to believe the every correction will see another new high. That is true, but can you afford to wait that long? In the crash of 1929 ? ?32 it took almost 25 years to see a new high in the market averages. Do you have that much time? Also folks don?t remember that many companies went out of business so your ?average? went out the window.

With the market so precariously perched it might be best to stand aside with your cash in your hand or under your mattress. When the Iraq war starts we could see a 1,000-point move ? and it could be either direction. What kind of a gambler are you? We?ll see.

Ask yourself this question: Is this bear market caused by Iraq? Back in 2000 no one knew where Iraq was on the map much less were able to spell Baghdad. We can?t blame Saddam for the loss of about 50% of market equity. When it comes right down to it the Iraq war is just another event in a long-term bear market just as 9/11 was. Events do trigger violent moves, but the overall trend is what is important and now that is down.

Another old saying is ?don?t fight the trend?. War or no war the safest place for your money is not in equities during this down phase. Cash or bonds are the only place to be.

Are you ready for the next violent move?

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

Writen By : Al Thomas

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks

Humpty Dumpty had a great fall and all the King?s horsemen could not put Humpty Dumpty back together again.

The Stock Market has had a great fall and all the brokers, CEOs, analysts and politicians have not been able to get it back up again.

Oh, it will go up again, but if history has a way of repeating it will be a long time before we see it at ?even?. From 1920 to the present there have been 3 major bull markets lasting close to 16 years. Unfortunately, each has been followed by a bear market of about the same length of time. So far we are ending the 3rd year of the projected down cycle with only 13 more years to get to the bottom. It is a long way off.

At a recent investment seminar one of the speakers asked his large audience if they believed the stock market would be higher 5 years from now. Every one except one thought it would be. The current mindset of most investors believes this also. For the period from 1982 to 2000 (18 years, close enough) there has been a bull market. Every investor has considered himself to be a financial genius during that time. There is an old saying, ?The market makes fools of us all ? sooner or later?.

Unless you learn to listen to what the market is saying and not your broker, you will be able to recoup some of your losses, but probably not all. During this long-term bear called a secular bear market, your main effort will not be to make money but to keep from losing more. During a bear market the one who loses the least is a winner. You may not like what I say, but history has that strange way of doing it over and over.

Maybe I am wrong about it because ?this time it is different?. I hope so, but you can protect your money in your 401K or elsewhere with a simple loss limit order. Call your broker and have him place a 10% (or whatever number your prefer) stop-loss order on all your positions. That way you don?t guess about where to sell; you let the market tell you when it has turned weak.

Brokers and brokerage companies hate stop-loss orders and will try to talk you out of it. Ask him if he will guarantee your portfolio. You can bet he isn?t that dumb. It is your money. Once it is gone you will have very little chance of getting it back. Protect what you have left.

Don?t be a Humpty Dumpty!

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

Writen By : Al Thomas

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks

As I have said many times before in this column it really doesn?t make any difference what you buy ? stocks, funds or indexes – it takes smarts to know when to sell. Direction of the general market is more important than selection of any equity.

Everyone from the multimillion dollar analyst on Wall Street to your broker to your barber thought he was a financial genius from 1982 to 2000. Anyone using the stock page from the Wall Street Journal as a target could have picked a winner even if his aim was terrible. Just hit the page anywhere and buy that stock. We were in a secular bull market. History shows these last about 16 to 18 years and , unfortunately, are followed by a secular bear market of about the same period of time.

During the up time the case for ?the market always goes up? becomes crystallized in their brain so that any set back is viewed as a ?correction? that will be soon be overcome and the market will be making new high prices again. Unless you are willing to limit the amount of loss from those high prices you will give back all your profits and many times even more.

The price of a stock will fluctuate for many reasons usually involving how much profit they are making or anticipate making in the near future. During the past 5 years we have seen tremendous ups and downs in many of the major issues. When a ?good? company?s stock goes down it doesn?t mean it is a ?bad? company, but it does mean you will be losing money if you hang on to it. The reason you bought the stock was to make money, not lose it, so you must be willing to sell when it goes against you.

Knowing the general direction of the overall market is the key to selling success. An excellent indicator is the S

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks

During our travel down life?s path we come to many places where the trail divides and we must make a decision. Some involve psychological (emotional) choices ? marriage, divorce, leaving home, career changes, etc. Others are monetary ? buying a new car, home, starting your own business, investing, etc. Many are interwoven having aspects of both psychological and monetary.

The marriage decision means you have decided to live and share everything with a partner and also support that partner in every way including financial.

Investing in anything is at first mostly financial, but as you accumulate a larger and larger amount it begins to have a grip on your emotions. Greed and fear are the two great motivators in the investment community. Everyone wants to buy that $1.00 stock that goes up to $200 per share. Unfortunately, for most, the pot of gold remains at the end of the rainbow. As the years pass by and your investments become larger and larger fear of loss creeps into the subconscious. No one wants to lose.

During the past 3 years we have seen many people lose a great deal of their stock market investments. Both fear and greed have taken their toll. Wall Street has not taught you how to prevent loss and they never will. Until you have experienced losses you go along with the program and too late you realize there must be a better way, another path. Once you have found it you now have the decision to break away from old conventional wisdom. You realize that you have been following the wrong path.

Wall Street?s maxims of Buy and Hold, Do Research and Dollar Cost Average have been and still are false. Once you have come to this understanding you will be on the road to successful investing. You will have taken the right turn on the path.

Losing money is not only a financial hardship but also a psychological burden. No one likes to be wrong, but hear this bit of advice about the stock market. It is OK to lose a small amount, but never OK to lose a large amount. Protection of your capital is of prime importance.

Whenever you buy a stock or mutual fund your first consideration should be how much am I willing to lose if it goes down instead of up? You can set that parameter at 5% to 20% of your investment. For stocks you can have the broker put in a permanent stop loss order, but for mutual funds you must set the price and make the call to tell the broker to sell you out. You are on the right path because you are in control. If you do sell with a 10% loss remember you now have 90% of your money remaining so you can find a more profitable vehicle. Ask around to find out how many of your friends now wish they had had one of those stop orders in place during the past 3 years.

The secret pathway to success in the stock market is selling, not buying.

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

Writen By : Al Thomas

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks

Never lose money in the stock market again. Yeah, I know. Don?t buy any stock, but that is not what I meant. There is a clear and easy way to protect your capital ? what you have now and what you might decide to buy in the future. And don?t count on your broker to tell you this.

As you are aware we have been in a bear market since the beginning of 2000. That is a long time and if you have held your stocks and mutual funds for all this time you have some pretty terrible losses. Losses you did not have to take if you had a knowledgeable broker or financial planner. Financial planners don?t know any more than brokers so you can?t count on them to save your money from being flushed along with everyone else. It is a shame that brokers and planners are not taught how to protect your capital.

When a broker is hired he is given 2 manuals to study. One is on SEC (Securities and Exchange) regulations so he will not break any rules so his company will not be fined for misconduct. The other is on how to open new accounts – how to get you to send money. There is no training on how to trade ? buy low and sell high. His training manual consists on how to do ?research?. Research is knowing all about a company to determine if it is well run and they are making money or have the ability to make money some time in the near future.

You can obtain complete reports of everything you want to know and even more from Morningstar. They will bury you in information. This kind of ?research? is worthless. Why? Because if you can find it out then everyone in the world knows it and it is reflected in the current price. The one thing you want to know is if you buy it will it go up.

The average broker has about 300 accounts and unless you have lots of money he will not pay much attention to you. As new brokers get a large number of accounts they give away the small accounts (those with less than $50,000) to the new, less experienced brokers so they can concentrate on the big boys with big bucks.

That is why you, and only you, must learn how to protect your investments. In a bear market the one who loses the least is the winner and the way to do it is with Stop Loss Orders. If you bought a stock or mutual fund you must immediately decide how much you will risk if it should go down instead of up. Usually 10% is a good rule of thumb. If you paid $40 per share you should sell it immediately of it goes down below $36. Don?t ask your broker because he has been taught to Buy and Hold and that philosophy will break you. As your stock goes up you must raise your stop (never lower it) so it trails 10% behind the closing price posted very Friday in the newspaper. There are literally hundreds of thousands of people today who wish they had done this during the past 2 years.

If you were one of them it is not too late to start now so your retirement account will be there when you need it.

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

Writen By : Al Thomas

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks

I constantly hear the talking heads on CNBC-TV, the radio and other places talking about THE market. Of course, they mean the stock market which actually now is world wide and no longer just concentrated in New York. To every New Yorker New York is the center of the world from which radiates all knowledge and everything else worthwhile.

The stock market is thousands of companies world wide. Those that have been listed with the New York Stock Exchange must meet strict requirements as to the capitalization of the company and the price of their stock as well as its ability to be traded so there must be many thousands of shares and large numbers of shareholders.

The trick, and I call it that even though it isn?t, is to be able to tell when it is in an up trend and when it is going down. If you knew this you could not only make a lot of money but could keep from giving back profits when you have them. When the market is going up you want to own stocks and mutual funds because 60% of a move in stocks is due to the general direction of the overall market.

When I first invested I made and lost like everyone else until I learned to listen to the voice of Mr. Market. Because we are so overwhelmed with useless data from brokers, newspapers, magazines, TV, friends and other nefarious sources we haven?t taken the time to learn the language of the market. And it isn?t that complicated. Mr. Market will tell you all you need to know.

Most of us don?t have time to be pouring over the financial news every day because we have a life that requires our attention, but if you are willing to give about 15 minutes each week you can learn the language of Mr. Market. Day trading language is not where it?s at; however, the long term language is very easy. You simply plot a 200-day moving average of the S

Tags: 401k, finances, funds, investments, ira, mutual funds, portfolios, retirement, retirement investments, stocks