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:

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

Stock Market Volatility

In my opinion, due to the volatility of stock market... Read More

Your Job

There are so many kinds of work that needs to... Read More

Keep Your Profits

It looks like we have now entered a new bull... Read More

The I Word is Coming to a Town Near You

Hello Inflation, it has been awhile, I see you on... Read More

Investment Research - The Dalbar Study

Very few people, even professionals, have heard of the Dalbar... Read More

What is the Most Important Indicator of All?

Most stock market traders have a favorite technical indicator.The one... Read More

A Stock Market Investment Strategy

I feel that an investment strategy in the stock market... Read More

Stock Trading Secrets?

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

Price Targets

Every day in any financial publication you will find the... Read More

Market Timing

Every broker and financial planner will tell you that you... Read More

Big Buildings Can Mean Big Economic Disaster

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

Where Is The Rabbit?

We need a rabbit!This was a pretty horrible week for... Read More

Invest In The Stock Market For The RIGHT Reason, Using The RIGHT Choices

Invest in the stock market for the RIGHT reason, using... Read More

Top 25 Growth Funds

On Monday, November 25, 2000 Investor's Business Daily listed on... Read More

Choosing a Stock Broker

If you were to find that you had some severe... Read More

Diversification

Wall Street's watchword has always been diversification, but what does... Read More

Why Technical Indicators

The fight continues to rage among traders who use technical... Read More

Oil Stocks CHK WLL - What Is Their Worth?

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

Why the Majority Fail at Stock Investing

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

The Holy Grail (of Investment)

Every year I go to the Money Show in Orlando,... Read More

Bottoms Ups

If you have talked to a stock broker or financial... Read More

12 Basic Stock Investing Rules Every Successful Investor Should Follow

There are many important things you need to know to... Read More

A Common Misconception about Stock Prices

I cringe every time I hear a novice investor tell... Read More

Buy and Hold Investment Strategy

"Buy and hold" is one of the most heralded investment... Read More

The 10 Commandments

Wall Street has been preaching for years and years to... Read More