Low Tide

When you stand on the ocean shore and watch the waves breaking you might become aware that the tide is coming in or going out. It is a slow process to watch the water retreat and when it finally gets to its lowest point it is almost impossible to tell if it has stopped or will retreat further. Plenty of wave action, but going nowhere.

This reminds me of our current stock market. It still looks like the tide is going out because for the last 2 months all the major stock indexes have been inching down. Even the talking heads on CNBC are saying you must be cautious. They would be fired if they told you to sell. How can you tell what is gong on? Almost every analyst and broker looks at the major market indexes ? the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Index. On the surface they look very negative.

The DOW is composed of 30 large companies. The S&P500 has 500 companies of many sizes, but the number (index) generated is weighted by the size of the company. The bigger it is the more it affects the index. And the Nasdaq is smaller companies and have more of the high tech corporations that have been hit so hard and are still having mucho trouble. The professional traders and mutual fund managers relate more to the S&P500. Almost all domestic stock mutual funds have been lower in price for the first quarter.

Even though the S&P has been slipping it is interesting to note that 300 of the 500 stocks that make up the index are HIGHER. Yes, 60% of them have continued to advance, but it doesn't show - yet. When a market is changing directions it is similar to watching the tide stop going out and slowly change. That is what is going on now. The wave action is there, but you can't see that the body of water is now beginning to move the other way.

There are some strong underlying currents such and the Small and Midcap Value stocks, Real Estate stocks, the Leisure group and Financials. This applies to picking individual issues as well as buying mutual funds that specialize in these areas. If you want to be successful ? make money ? in this market you must be with the strongest group so you must switch from weak stocks and mutual funds to those that are currently strong. Fund managers tell you to look at the 3 and 5-year track record and "stay for the long haul". All that does is make money for him, not you. You must find the no-load mutual funds that are going up the fastest during the past 3 and 6-month time period and buy them now.

The only way to Buy and Hold is to buy and hold only while they are going up and to sell them immediately when they start to decline. Don't let the weak stocks or funds carry your cash out with the money undertow.

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

In The News:


What is Involved in Peak Performance Trading?

There is so much involved in developing peak performance, that... Read More

Stock Investment Advice

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

Stock Market Investing: Knowing When (and when not) to Sell

One of the greatest challenges of investing in stocks is... Read More

Overvalued & Underbought

With all the bad news that has been dumped upon... Read More

The Information Age

It is wonderful to be alive in the information age.... Read More

Living Trust Investing: Income Considerations when the Grantor Dies

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

Big Buildings Can Mean Big Economic Disaster

AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More

Buy Low - Sell High

Now where have I heard that before? I know. It... Read More

The Stock Trading Plan - Why You Must Have One To Trade Successfully

This is the continuing story of our two imaginary traders,... Read More

Race Horses and Mutual Funds

For years investors have been taught to look into the... Read More

Small-Cap Stocks: The Beginning of the Journey

When an individual investor wants to roll up his sleeves... Read More

Why the Majority Fail at Stock Investing

The gleam and bright lights of Wall Street lure in... Read More

Selling

The stock market has been going up for more than... Read More

What Our Investment Advisor Wont Say Off The Bat

Most advisors will tell you they can beat the market.... Read More

A Triple Dipper: How to Make 3 Profits on 1 Stock Trade

This is a rather simple strategy with which I am... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Making Outsized Returns in the Stock Market - Using the Dow Theory

The Dow TheoryCharles H. Dow... Read More

Market Timing?

The recent criminal fiasco in the mutual fund industry is... Read More

Lies, Damn Lies and Mutual Fund Returns

How many times has this happened to you? You're at... Read More

Stock Trading Secrets?

How often have you come across an advertisement or e-mail... Read More

Investment Discipline

One of the great "secrets" of successful people is discipline... Read More

The Seven Mistakes All Novice Traders Make and How to Correct Them

We learnt the following the hard way! If any of... Read More

Investing in Stocks and The Game of Monopoly

To begin, you might look at playing the stock market... Read More

Oil Stocks CHK WLL - What Is Their Worth?

(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More

How to Maximize Your 401k Mutual Fund Returns

When it comes to 401k's there is an overabundance of... Read More