The Elephant

Four blind men were asked to give a description of an elephant. They had not seen one or ever encountered such a beast.

One grabbed hold of its tail. Another put his arms around a leg. The third gripped its trunk and the fourth walked into the side. The description given by each one was correct and accurate except it did not describe the elephant's true form. Each man was right and each man was wrong.

We now have some equally blind men trying to describe what is happening in our economy and the stock market - economists, brokers, bankers and financial planners.

The economists say that because of the interest rate cuts by the Federal Reserve and the huge inflow of cash that the economy will recover in a short time. The bankers opine that all that money that the banks are allowed to loan is not being given to their old customers and they definitely don't want to make new loans to new and unknown companies. The brokers say you are in for the long haul and don't worry the market always comes back. The financial planners have a new plan to diversify your holdings by shifting your money around to take advantage of this current market.

They are all right and they are all wrong. You cannot explain the overall economy with a single solution. We have a complex mix with new ingredients coming to our awareness each day.

To get a better look at this elephant you must stand back not only in distance but in time as well. Ask this question: Where is the country now economically in comparison to September 10 before the terrorist attack? At that time the stock market was going down and we were in a recession. Then the market crashed and the recession was officially declared. The stock market has climbed back up to where it was September 10 and the economists are telling us that the recession may be over.

However, when I look at this elephant it still looks like the same elephant. The basic portions of the economy are still slow and slowing. Unemployment is rising. The banks are not loaning money even though they have it. Venture capitalists are not putting money in new companies. Manufacturing capacity has not come back. We have weaker housing because of higher interest rates and the consumer is spending like he used to. Deflation has reared its ugly head. Most of the new spending has been on counter terrorism that is not productive and taxes have not been reduced so the consumer can have more spendable cash. And a lot more.

The stock market rally has been in anticipation of greater corporate profits that could be a long way off.

Now is the time to be wary of whom you listen to before you invest or make any changes in your investments. The elephant being described to you may not look like that at all.

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

[email protected]; 1-888-345-7870

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27-year-old rule changed: Disclosure limit on MF, stock investment up for bureaucrats  Economic TimesGroup A and B officials had to intimate government if total transaction in shares or MFs exceeded Rs 50K.
New stock ideas boost equity mutual fund portfolios  LivemintThe sharp spurt in assets under management (AUM) in mutual funds in recent years appears to have compelled fund managers to venture out of their comfort ...
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Top 8 most common mutual fund investing mistakes and how to avoid them  Business StandardMutual funds garnered Rs 8,022 crore of its assets by way of SIPs in December 2018, 29 per cent higher than the previous year | Illustration: Binay Sinha ...
Heres why investors should make index funds a part of their core portfolio  Business StandardWe often hear statements such as “Localisation is the key to success in India” or “What works in the rest of the world does not work in India”. These statements ...
Quantum Mutual Fund uses cash pile to buy stocks cheap  Economic TimesQuantum Long Term Equity Value Fund, where value investing is the pronounced fund allocation theme, has brought down the level of cash at its plan to the ...
Debt mutual funds with Zee exposure send investors into a tizzy  Economic TimesMUMBAI: Worries about the prospects of debt mutual funds holding securities of Subhash Chandra's Essel Group entities have resurfaced after Kotak Mutual ...
Allocating to passive mutual funds in one's portfolio is increasingly making sense  Economic TimesPassive investments makes sense today as increasingly active ones are unable to beat it most times.
Large cap index mutual funds continue to outshine actively-managed large cap schemes  Economic TimesLarge cap index funds are outperforming the actively-managed large cap mutual fund schemes in the past one-year period. Kotak NV 20 ETF is topping the ...
Equity funds record highest ever exposure in banking stocks in March 2019  Business TodayAs per the latest data available from the SEBI, overall deployment of equity funds in bank stocks grew around 52 per cent year-on-year (y-o-y) in the month ...
Mutual fund houses push sell button on auto and construction sectors  BusinessLineBut stock up on IT scrips amid redemption pressure.
Fund managers raised stake in 194 stocks in Dec quarter. Is it a good idea to follow them?  Moneycontrol.comFund managers raised stake in as many as 194 companies in the December quarter as compared to the previous quarter. Stocks of some these companies have ...
What Type of Mutual Fund Schemes Should You Invest in? Know Here  News18Equity funds are mutual funds which invest majorly in equity stocks of listed companies. They are considered to be risky but they tend to give higher returns in the ...
Private banks, oil & gas companies find favour among fund managers  Moneycontrol.comMoneycontrol News. The month gone by saw a notable change in sector and stock allocation of funds from the mutual fund industry. On a month-on-month ...
Investing in mutual funds? Size of fund doesn't matter  Economic TimesA bigger MF is not always a better fund. If you come across a well-performing small fund, invest in it.
These are fertile grounds for long-term stock pickers, says Samir Rachh of Reliance Mutual Fund  Economic TimesSmall cap funds are going through a rough patch after a bull run in 2017.
What India's top three MFs bought and sold in January  Economic TimesStock funds took in a net Rs 6160 crore, the least since January 2017.

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