If you are the average American investor it means you have no idea what or when you should be buying and selling. Stocks? Bonds? Mutual Funds? Limited partnerships? ETFs (Exchange Trader Funds)? Money Markets?

Any broker is ready and willing to prescribe his brand of snake oil. Notice I left out \’able\’. The brokerage houses require their \”experts\” to stick with the party line and to recommend only what the house wants sold. It might be a new issue or some excess inventory they want to move.

Brokerage houses to this day do not want their brokers to think for themselves or to come up with any creative method to help the customer make or preserve his money. No, that is not what they say, but it is what they do.

History has proven that a knowledge of technical analysis is far superior to fundamental analysis. The fundamentalist studies corporate sales, P/E ratios, gross margins, cash flows, earnings, growth, management\’s background and economic data. When most of these factors look their best is when the market is at the top and gives fundamental buy signals. When they look the worst is at the bottom and that is when these companies are the best buy – sometimes.

The best signals are given by technical analysis. With today\’s computers it is relatively easy to follow hundreds of stocks or funds by setting up specialized programs to alert the investor when certain technical indicators are aligning to give investment signals. These parameters are not subjective, but mathematical. One large portion of technical analysis is based upon charting which is very subjective and requires a great deal of applied apprenticeship.

The greatest amount of customer snake oil is made from fundamentals as corporate \”facts\” are most easily distorted from huge sources of information. It is somewhat more difficult to hide empirical facts especially when placed on charts.

Snake oil comes in many forms, but mostly in beautiful color brochures about their projected performance. Pictures of their offices and equipment. On CNBC-TV there will be interviews with the company CEO who will paint a glowing picture of anticipated performance and profits. Fingers are twitching as the investor wants to write a check to buy some of these magnificent shares. Never listen to the company CEO. Do you expect him to tell you any bad news?

It takes a while to develop a story and have it seep into the pores of broker/salesmen. They are the targets of many snake oil presentations as these are the people who then sell it to you. There is one way to check out the story\’s facts. Put up a chart on your computer screen that is from one to three years and if it has a price appreciation that is slowly ascending at about a 30 degree angle this one might be a good buy. If it is declining look no further. Pass or sell out if you own any.

Always be cautious. What you might be getting is a big expensive bottle of snake oil.

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

Writen By : Al Thomas

Tags: bond market, bull market, cyclical bull market, economics, stock market, U.S. debt, U.S. economy

During every secular bear market there are cyclical bull markets. Don?t let this confuse you. It is very simple. Read on.

First let?s understand what a secular bear market is. As far back as you want to go in the history of the U.S. stock market there have been cycles of up and down. No one will deny that. See how easy this is. These long term cycles average out to about 16 years. Sixteen years (about) of the stocks going up followed by 16 years of stocks going down.

Did you happen to notice the long pull up from 1982 to 2000? Just about everything went up and every investor thought he was a genius. Even your broker and financial planner looked smart. Then ca me 2000. Ugh!

Why did the NASDAQ drop 78% and the Dow plummet 40%? In hinds ight everyone has an answer. My question is if brokers and analysts are so brilliant why didn?t they tell you to sell at the top instead of continuing to advise buying all the way down? The professionals sold and went short while the little guy sat there with his portfolio in his hand agonizing all the way down.

It is an unfortunate truth that brokers and financial planners are taught their trade by Wall Street brokerage house. Please remember they are not there to help you get rich. They are there to get rich off you.

Back to the cycles. Is there any indicator that can alert an investor to a major trend and especially a major trend change? The market seems so volatile with its daily ups and downs that it is almost impossible to buy an equity that will make money for you. Many investors are told the half story that they should buy and hold and not worry about the current price. That is obviously a half truth because when we look at history we see that half the time the market is going down and that is NOT when you want be holding equities.

There is a very simple method of determining major market direct. Forget the daily buys and sells. Forget the weekly buys and sells. Forget the monthly buys and sells. Step further back and look at the entire year. You want to see what has happened and what is happening for the past 200 trading days.

Go to almost any stock web site and enter the symbol one of the major indexes ? the Dow Jones Industrial Average, the Standard

Tags: bond market, bull market, cyclical bull market, economics, stock market, U.S. debt, U.S. economy