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The Alchemist (02/20/2008)
By Al Thomas


Anyone with a 401K or any other managed retirement portfolio has seen its value drop significantly in the past few weeks.

Calls to the manager almost always have the same reply. "This is only a correction." "Don't worry. The market always comes back." or some other ilk. And your money continues to disappear.

Almost without except all mutual funds are required by their charter to be fully invested at all times. Unfortunately, there are times when there is nothing to buy and the fund manager's hands are tied because he is not allowed to sell losing stocks.

That doesn't apply to you. Or does it?

As the investor you may direct the fund manager to sell and put your money in a money market account. For the past almost four and half years the market has continued erratically, but steadily up. There has been no reason to sell.

Things have changed.

Now it is time to move out of stocks and into cash. Cash is a position. No broker or fund manager will agree with that as he can't make any money unless your account is invested in stocks or mutual funds.

As far back in stock market as anyone may care to search during any 10 year period there has always been a major correction. Some of those "corrections" have wiped investors out. The 1929 "correction" took 25 years to come back. Do you have that long?

How do investors know when to sell? Brokers and financial planners won't tell you as most of them don't know. Yet it is relatively easy so it is up to you to protect your money.

Their is an excellent indicator that is published every day in the newspaper Investors Business Daily. You don't have to buy the paper. You can look at it in the local library.

In the second section you will find a chart called the Investors Business Daily Mutual Fund Index. The chart shows an index of 24 major mutual funds. There is a dotted line called the 200-day mutual fund average. For the last almost 5 years this line has been going up.

It turned up in April of 2003 to give a BUY signal. It has recently turned down. That is the SELL signal for the entire stock market..

Any investor can check the major indexes such as the S&P500 or the DOW using these figures on www.bigcharts.com .

Smart investors to protect their savings will now instruct their fund managers to sell everything and put it in a money market account. Sure, it won't make a lot, but your money will not disappear at the rate of 20, 30, 40% or more as it did in 2000. Smart investors wait for that moving average line to turn up before buying back in.

All 401Ks are in danger of dropping 50% from here. The prudent investor must have a plan to protect his money.

Protect yourself. Sell now.

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 and receive his market letter at no charge on www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.

Copyright 2008 All rights reserved.



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