TIME TO BUY – NOT
Been listening to CNBC-TV or Bloomberg Network TV or any of the financial experts on the radio? Don’t miss this “opportunity” to buy at these great “values”.
I think I am going to be sick.
According to the “experts” there are the greatest “opportunities” to invest since Attila the Hun crossed the Alps with elephants. The experts have forgotten to look at history.
Going back more than 100 years there has been a 16-18-year cycle that has repeated over and over. Sometimes the down has not gone far down and sometimes the up has not gone far up; however the percentage changes in many case have been very violent.
History shows the greatest up move from 1982 to 2000. There will be some argument that this was the top of this cycle as the DOW continued on to make a new high. The NASDAQ was not able to recover more than approximately 50% from the lows made in 2002. The overall trend has been and is down.
None of the experts are willing to tell John Q. Public that this could last for another 10 years – if you believe in the possible 18-year cycle which started its descent in 2000. Joe Sixpack (that’s the new moniker for John Q. Public) will watch his 401K slowly disappear because of the mismanagement of the fund manglers not misspelled). Almost every investor has a bias toward buying. Almost none are taught how to sell short, buy bear funds are simply be in cash when the bear is eating everything in sight.
Mutual fund managers are trapped by the charter of the fund that requires 90% of customers money to be invested at all times. Even if they know there is nothing to buy they must buy and keep stocks that are declining. They retreat in to the nonsense formulas called value investing. These formulas do show a company to be a great “value”. If it is such a great value why is it going down?
When the stock market starts down and loses huge value as it recently has it scares investors. They stop buying. It takes new money to put the market up. If you want a bigger fire you must pour gasoline on it. If you want the market to go up you must pour money on it. That is not happening now.
Fear of loss causes loss of confidence that stops buying. Confidence indicators are going down. Even rich people are cutting back on their spending.
Why does a millionaire worry about the cost of gasoline? Beats me. But they do. The feeling of insecurity permeates everyone and the flow of money slows drastically. Joe Sixpack should not be hoodwinked by beautiful slick talking cheerleaders on TV or by any financial planner. Now is not the time to be invested or to be buying any stocks, ETFs or mutual funds. Now is the time for…. CASH!
Al Thomas’ book, “If It Doesn’t Go Up, Don’t Buy It!” has helped thousands to make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com . Discover why he’s the man Wall Street does not want you to know. Copyright 2008. All rights reserved.