Lemmings Are Gathering

Before they go over the cliff to their destruction these little furry ones get together for a party and celebration. Each tells the other how smart he has been with his investments and buying and selling of stocks and real estate.

Wait a minute. Did I say lemmings? I think I meant investors. It seems they had that same party in January 2000 and it was a doozy that lasted for several months. A great time was had by all. They did not have one in 2001 as membership dropped off. Nor again in 2002 and by 2003 there wasn't anyone around at all.

The lemmings (oops, investors) had gone over the cliff. And they were such nice little guys too. The few at their party who tried to preach caution were drowned out with loud squeals that the market was going to 40,000 or maybe higher.

This new crowd said it will never happen to them as they are not going to put their money in that risky stock market. Oh no, there is a really safe investment that always goes up ? real estate. There is only so much land and no more is being created. The population is expanding so the demand will continue and prices can only increase.

Even for the novice speculators there is a place to make big bucks. They are joining real estate clubs just like the old stock market investment clubs to which they have previously been members. Put in a few thousand and watch it grow as the real estate market keeps going up and up. These investors know they are on the verge of great expectation that will mean wealth. Wealth without work or effort. Maybe they forgot how much they lost from the expert advice in that previous investment club, but everyone knows real estate is a sure thing.

A stock investment is just a piece of paper, but real estate you can feel the dirt, walk through the building and slam the doors. That's solid. You can't miss. With each deal they recognize how they are getting smarter and smarter. Hurrying, doing nothing constructive to make their fortune. Just like in 2000.

For more than a year the professional traders, insiders and large institutions have been quietly selling their stocks and I am now beginning to hear of sales of major properties. Just because someone has a lot of money doesn't mean he is smart. These groups can be as wrong as the little investor.

Real estate may continue to be an excellent investment, but speculation in real estate can be hazardous. If, or maybe I should say when, this market stops going up or even starts down it is very hard to sell a property. Payments must be made and upkeep maintained. It is possible to rent out some houses or offices, but the income ratio today does not allow a breakeven to costs.

These real estate lemmings don't seem to care. They are gathering in larger groups and are working under the greater fool theory.

This is a time for caution as it was in 2000 for stocks. You don't want to go over the cliff again.

Copyright 2005

Al Thomas' best selling 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 to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.

In The News:


Successful Trading ? Taking Profits - Part 1

So you're started trading, you bought some positions with your... Read More

DIY Portfolio Management

Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More

What the Hell is a Stock option?

A 'stock option' is a contract between two parties giving... Read More

Analysts - Do They Really Know The Stock Market?

When you become interested in a stock or mutual fund... Read More

Market Globalization

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

Traders, Defend Against the Dreaded Death Spiral.

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

Online Investing & Stock & Share Trading: 4 Reasons Why Most Online Investors & Traders Go Broke

Are you attracted to the idea of being in control... Read More

It Cant Be Done

Wouldn't it be nice if you were only in the... Read More

Advantages and Disadvantages of Mutual Funds

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

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

A Personal Stock Market Investment Philosophy

∙ Make every investment in the stock market a long-term... Read More

War Market

There is no question that the stock market is being... Read More

Pathways

During our travel down life's path we come to many... Read More

How to Evaluate Load vs. No Load Mutual Funds

If you have been dealing with mutual funds for any... Read More

Discipline

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

Gold Fever

Right now there doesn't seem to be any "gold fever".... Read More

The Club

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

Mousetrap

The spring-loaded rat catcher is the ultimate low-tech device invented... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

High Price/Earnings Ratios and the Stock Market: a Personal Odyssey

After some forty years of banking and investments, I retired... Read More

Hold Em and Fold Em

When most analysts, financial planners, fund specialists and investors try... Read More

Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others

When it comes to stock market trading it PAYS to... Read More

Price to Earnings Ratio - P/E

After finding the price of a particular stock, usually the... Read More

Attitude Is [Almost] Everything

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

Stocks & Oil, Sat Jun 18th, 2005

Both the stock market and oil prices rallied recently, which... Read More