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  (ARCHIVES)Back to Current
The Alchemist - My Broker Doesn’t Know (08/16/2006)
By Al Thomas


     
The market has been slowly (well, not so slowly in my case) coming down so I called my broker to find out what to do. And I thought I was confused. He did have some suggestions such as this is a good buying opportunity so send in more money and we (catch that "we", but it's my money) can buy some more shares and dollar cost average so when the market turns back up I will make a nice profit. Problem is he doesn't know when that will happen. I asked about selling my shares and waiting until "we" saw it going up again and then I could buy back in. He definitely did not like that idea and told me I could not afford to be out of the market as I could miss the next big up move. He did not mention anything about missing the next big down move. He gave me that worn out story about staying in for "the long haul". The truth of that story is it takes 30 years to wait it out and I don't have that long. If I had been a shareholder in 1929 and not sold out I would have had to sweat it 25 years to get back to even. Even is not what I had in mind. Even doesn't make any money.

One of my friends told me to ask him about the 16-year cycle of bull and bear markets. He

seemed confused at first, but as soon as he realized I didn't know anything he became the expert again and told me there was nothing to it. Later I looked it up and found out he was wrong and was BS-ing me so I would not sell.

Going back for more that 100 years there is a pattern of approximately 16-year bull and bear market cycles. The last bull cycle was 1982 to 2000 (OK 18 years, close enough). According to the cycle we are in the next bear phase may (I did not say would) last until 2016 or thereabouts. During those long term bear periods there are shorter term bull cycles. But you have to be smart enough to be able to see when those turns occur. My broker who is (supposed to be) smarter that I am said it is not possible to time the market - just buy and hold. Isn't he supposed to know this? I went on the Internet and did a search about "market timing". I was buried with all the information. There are many ways to do it so I looked for the simplest one I could find as I did not want to be trading in and out and also did not want to watch to market all the time. Was there one that I could relax and look at weekly or even monthly? I did see one called Two for the Money and showed it to my broker. He didn't like it. Maybe because it involved equities that paid no commission. I think I'll get a new broker.  

 

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