Jack and Jill

Jack and Jill went up the hill to fetch a bucket of ?money. Money? They are continuing to fill their bucket with stocks without any consideration to the value of these equities. They are not worried at all as they are buying "safe" mutual funds.

Everyone knows mutual funds are safe. Jack and Jill know they don't know how to pick good stocks so they leave that to the fund manager. He is an expert.

When you look at the long term record of 99% of the mutual funds you will see that expertise has been sadly lacking. I hate to remind you of the 2000 to 2003 period, but I must. In fact I must tell you it is going to happen again. Now you want to know when?.and so do I.

And that is the problem with almost every fund manager. As long as the market is going up they can't do much damage to your account, but when it rolls over and heads down they have no idea how to invest when a bear market is in progress. Not a single one of them will acknowledge that cash is a position.

Cash is a position? They are in shock. Of course they are. If brokerage customers put their money in a money market account while the market is falling it means they do not make any commission at all and if they recommend this to their customers the brokerage manager will fire them because he won't make any money either. "Keep your customers fully invested or I'll show you the door" is the manager's comment.

You must learn when to sell. Any fool can buy, but it is the wise man who knows when to sell. To see the condition of the overall market one of the best indicators is the SP500 Index. Your broker compares everything he does with the SP500 because it is a broad base of 500 stocks that are widely traded.

The finest indicator is the SP500 Index. Draw a 40-week chart of the closing prices. If you don't know how ask your broker. He will tell you. Write it down and save it. It is very simple. Have him set up a 40-week Simple Moving Average to appear on that chart. Look at 5 years worth of prices. Immediately you will see that if you are in the market while the 40-week MA is going up you are making money and if you are out of all your positions while the index average is going down you will not lose money. It doesn't get any easier that that.

Jack and Jill can fill their pail as the market is going up and need not spill their accumulation while they walk confidently down the hill holding their bucket full of cash not equities.

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:

7 Vanguard High-Dividend Mutual Funds to Own  U.S News & World Report Money
The 25 Best Mutual Funds of All Time  Kiplinger's Personal Finance
Donate stocks  Doctors Without Borders

Ignore Stock Market Talking Heads

You should ignore analysts on TV, the radio, the newspaper... Read More

Can?t Stand The Heat

It seems that every day I turn on the TV... Read More

Option Trading Basics

Options trading can increase the profits you make when trading... Read More

Cash Is A Position

I go to the Money Show every year to visit... Read More

Diversification

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

Long Term Financial Vehicles

Investing in long-term financial vehicles give you the most gains... Read More

Investing in the Stock Market

From the book 'The Stockopoly Plan' by the author Charles... Read More

Understanding Stock Market Indexes

A stock market index is a statistical measure of changes... Read More

Discipline

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

Small-Cap Stocks: The Beginning of the Journey

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

Trading Education: The Best of Both Worlds!

I made my very first investment in the stock market... Read More

Using Sector Funds to Construct Diversified Mutual Fund Portfolios

'Sector funds are too risky.' 'I doubled my money with... Read More

The I Word is Coming to a Town Near You

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

Lifestyle Funds Provide Greater Security?

With the stock market stubbornly refusing to settle down and... Read More

Valuation

Every day I hear from the "experts" on CNBC-TV and... Read More

Selection Vs Direction

As I have said many times before in this column... Read More

The POWER of a Proven Stock Investment Plan

When you invest in the stock market for ever-increasing cash... Read More

A Penny for Your Stocks

According to Investopedia Inc. the penny stock market has seen... Read More

The Holy Grail (of Investment)

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

What is a Trading Plan ? and Why You Need One?

How do you make money without picking tops and bottoms?I... Read More

Understanding a Stocks PEG Ratio

A PEG ratio cannot be used alone but is a... Read More

Size Counts!

What the heck am I talking about?It is often said... Read More

The Elephant

Four blind men were asked to give a description of... Read More

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds... Read More