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The Alchemist (11/26/2008)
By Al Thomas


You surely have heard every one of these from your broker or financial planner. They have been good students, but poorly taught.

And they will break you unless you become a better student of the market than they are. Wall Street wants your money. They donít want you to ever take it out of their clutches. Even if you donít trade as long as you are invested they make money. Not a lot, maybe only 1%, but multiply that by millions of investors and before you know it that is a bunch of money.

Investors hear these refrains every day:

1.Do research

2. Buy and hold

3. Dollar cost average

4. Diversify

5. Buy a good stock and put it away.

6. You canít afford to be out of the market

7. Never try to time the market

8. Your broker will watch your account

9. Rearrange your portfolio with age

10. the market always comes back

We are in the midst of a bear market that is going to last several years.

Not one of these lies will save an investorís portfolio. He will slowly but surely go broke.

Wall Street trained brokers are taught the above and actually come to believe them. Not more than 1% of brokers are allowed to protect clients money. During down (bear) markets customer money should be in cash in a money market account or a CD waiting for the market to turn up.

Brokers are taught that it is impossible to time the ups and downs of the market. Market timing is beautifully simple, but they donít want to know how to do it even for their own accounts.

Many of my regular readers may remember I wrote last February that the top is in and to sell everything. Then in subsequent columns have cautioned not to buy anything. Both of those are true today.

It is my guess that not one in a hundred investors have been told to sell and go to cash. Financial ďexpertsĒ continue to say buy ďfor the long haulĒ. How long is that? How many investors can watch their hard-earned savings disappear usually selling at the bottom. We are a long way from


Treasury Bills are now selling close to zero percent interest. Why?

Because even the smart money does not want to buy. Very nimble day traders may be able to make a few bucks, but many of them are being sent to the cleaners. Donít try this.

It is unfortunate that most mutual funds are required by their charter to be 90% invested at all times. As the stock market sinks into oblivion the fund manager must buy equities that are clearly junk. The only thing an investor can do with his 401K is to have all his funds transferred into the Money Market fund. At least he wonít continue to lose.

You must take charge. Do not be mesmerized by the Wall Streetís

10 melodies of failure.

You may receive Al Thomasí investment letter at no charge for 3 months on the web site www.mutualfundmagic.com Never lose money in the stock market again. His book ďIF IT DOESNíT GO UP, DONíT BUY IT!Ē has become a classic.



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