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The Alchemist (07/04/2010)
By Al Thomas

Wall Street is at it again. Helping investors with their money. But helping them do what with their money? That’s easy – make more money – for themselves.

If you listen to CNBC-TV almost every financial manager is talking about how dangerous this market is and investors should be thinking long term. Don’t worry

about the daily volatility. Shut your eyes and let me (the broker, fund manager) take care of things for you. Ha, ha.

Reminds me of the Woody Allen movie when someone asked him what work he did. “I’m a financial manager”. What do you do? “I manager people’s money until it is all gone”. Does this seem familiar?

Wall Street is again setting up the little guy to use the tried and true loser called Buy N Hold. For the past 10 years Buy N Hold has lost 24% for the investors who had held the S&P Index fund.

If you listen to the answers when the pretty cheer leaders on CNBC-TV ask their guests, “What are you buying now?” you hear most them say the best strategy is to buy something to hold onto for several years. The old “long haul” loser strategy.

Buy a good stock and put it away has been another loser that brokers have been taught to tell customers. And brokers believe these lies. I suggest that investors go back to the highs of 2008 and see how many of the “good” stocks are making new highs. Hardly any.

Very few brokers will admit there has been a bear market since 2000.

They can’t. Customers like to buy. How can they buy when the long term trend is down? But the brokerage firms continue to issue buy recommendations. How many sells have investors seen? Almost none.

No one can predict when the next big stock decline will start, but the average investor will be another deer in the headlights frozen with fear, afraid to sell because of another Wall Street favorite loser, “You can’t afford to be out of the market”.

I have spoken to many brokers and almost without exception they don’t know what to do. They do not realize that cash is a position.

If they tell their customers to sell they will be fired. Yes, that’s true because the brokerage company does not make any money when the investor has his funds in a money market account. That’s why they don’t want you to sell.

It is not that the cheerleaders are dishonest. They don’t know that they don’t know. They can’t see the forest because all the trees are in the way. They are too close.

When they call in the floor members in the morning for market opinions it must be remembered these are very short term traders and do not invest in the market the same as mutual fund managers and Joe Sixpack. The latest advice will break your bank. Don’t listen.

Al Thomas’ book, “If It Doesn’t Go Up, Don’t Buy It!” has helped thousand make and keep their stock market profits. A limited subscription to his advisory letter is available on the web site www.mutualfundmagic.com Copyright 2010 Williamsburg Investment Co. All rights reserved.



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