It Cant Be Done

Wouldn't it be nice if you were only in the stock market when it was going up and have everything transferred to cash while it is going down? It is called 'market timing' and your broker or financial planner will tell you "it can't be done". What that person just told you is he doesn't know how to do it. He doesn't know his job.

Even the Federal Reserve wrote an article saying that market timing does out perform the S&P500 index which is one of the best market directional indicators.

There are many advisory services that offer market timing. If you search on the Internet under "Market Timing" you will find them or you may look in various publications such as Technical Analysis of Stocks and Commodities magazine or Investor's Business Daily newspaper. Once you have found several you will find that some have several buy and sell signals each year and a few average only one timing signal per year. Here it depends upon your personality and your approach to the market.

For the active trader the more signals the better and for the longer-term investor the slow signals are best. You will have to do your homework and will want to send for a trial subscription to their newsletters. You might have to try several until you find one you like.

Instead of subscribing to an advisory letter you may decide to make up your own timing signal. It will take some initial work, but once done you will not have to pay anyone else for the service.

Most of these timing methods use two a simple moving averages of from 50 days to 200 days plotted with the S&P500 Index or the NYSE Composite or the Nasdaq Composite if you are investing in the high tech stocks or mutual funds. Yes, this definitely works with mutual funds. The longer the time of the moving average the less frequent will be the Buy and Sell signals. The signal is generated when the index penetrates the moving average line. When the index is below the moving average and goes through it to the upside you have a Buy and visa versa for the Sell. Nothing complicated.

If you want to piggyback the work of Investor's Business Daily look at their Mutual Fund Index where they show both a 50-day and 200-day moving average lines. Both of these methods gave sell signals last September/ October. Would your investments have been more profitable if you had gone to cash at that time? Probably. The 200-day line still has you in cash while the 50-day line had a Buy/Sell in January and a new Buy about April 20.

Basically what market timing does is protect you from any big loss in a bear market. The first rule for all smart investors is to protect their capital. If your broker does not know how to do this you need a new broker.

It's your money. Keep it.

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 and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

[email protected]; 1-888-345-7870

In The News:

The 25 Best Mutual Funds of All Time  Kiplinger's Personal Finance
7 Best Performing Mutual Funds in India  U.S. News & World Report

The Right Mutual Funds For Baby Boomers

If you are a baby boomer, time is not on... Read More

Dont Ask Your Broker

Unfortunately, most of you who are reading my column are... Read More

The Club

Yesterday I received my monthly issue of MONEY magazine. This... Read More

Traders, Defend Against the Dreaded Death Spiral.

It has often been said that there is only two... Read More

Stock Investment Advice

Stock investment advice is easy to find. Do you get... Read More

I Love To Lose Money

Well, not really. What I mean is I don't mind... Read More

Advantages and Disadvantages of Mutual Funds

Outlined below are some of the advantages and disadvantages of... Read More

Living Trust Investing: Income Considerations when the Grantor Dies

A common problem I often see when working with living... Read More

Chart Reading

As an investor you will want to check out any... Read More

Invest, Be Wrong, and Make Money in the Stock Market

I have been trading for several decades and was an... Read More

Its A Bull, Its A Bear, Its Suptertrader!

The higher the market goes the more confusing are the... Read More

The Stock Market - How Just One Question Will Tell You All You Need To Know About Your Stock Broker

Last time we looked at the real performance of the... Read More

Dollar Cost Averaging

Dollar cost averaging is one of the most popular ideas... Read More

Look Out The Window

Quick, look out the window. It's raining. No, the sun's... Read More

Zero Sum Game

Most people think the stock market is a zero sum... Read More

Will the Stock Market be Lower in October?

The stock market often closes a week in the middle... Read More

The Bottom?

Every day I hear someone on CNBC proclaim that "this... Read More

Discover the Retirement Breakthrough the Federal Government Created for You - The Roth IRA!

If you don't know what a Roth IRA is then... Read More

Market Globalization

Just 30 years ago the stock market was a shadow... Read More

Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading?

Ever notice how behavior in one area of life can... Read More

Trading Tips No 6: The High Cost of Low Cost Stock Market Information

It has been said that low cost or even free... Read More

The Stock Market Doesnt Care if You are a Beginner?. Get Prepared to Succeed at Trading

Stock trading remains a very competitive field and the stock... Read More

Does Japan Matter?

For the last 12 years we have seen the Japanese... Read More

Box Of Chocolates

Ever have one of those sample boxes of candy? Each... Read More

Complacency Indicator

If you haven't heard of the technical indicator with the... Read More