TRADING VOLATILE UNCERTAIN MARKETS
Google shares are up 6% today. I donít care. Apple earnings are not that good. I donít care Proctor & Gamble have a good dividend. I donít care.
Almost all the economists say the economy is improving. I donít care. My broker called and said this is a good place to buy. I donít care.
An email came in telling me to buy a Chinese stock that will make 3,000% this year. I donít care.
One of the basic rules of investing is Ďwhen in doubt stay outí. The market ďexpertsĒ are fighting worse that a pack of bulls and bears. So where should money be when this happens?
It is safer under the mattress even more so than government or municipal bonds because their principle fluctuates. If my money is not exposed to equity traders at least I will have some to buy gas and bread. Even that is exposed to inflation being caused by the Washington printing press.
A smart investor will find a method of staying with the major market trend. He must know when to be in the market as it goes up and when to be out as it is declining.
During the period from January 2000 to December 2010 any investors who followed the notorious Buy N Hold method with the SP500 index mutual fund lost 24%. And that does not take into account the loss of buying power from inflation which is said to be 20%. JoeSixpack got a double whammy. Is there any solution?
Yes, and your broker will tell you it doesnít work, but it does. It is called market timing. Unfortunately very few brokers ever learn there is a very simple method that works for the long term investors. Brokerage houses wonít tell their customers about it because there may be long periods when the customer has his funds in a money market account. The broker doesnít make a profit protecting your money when the market is going down and you are in cash.
I wonder if that is why they donít teach them that method.
Think of how much more money there would be in your account today if you had known about the 200-day Moving Average method. A guess would be 50% more than from the high of what you had in 2001.
One of the greatest problems is if the broker were to do this for his customers he would be fired. From 2001 to 2003 his clients would be in a money market account making no commission and no hidden fees. The same for the big break in 2008. The investor would have been out.
Here is the secret brokers donít want you to know. On your computer go to a web site where you can put up an index chart of the SP500. Make a 10-year chart. Then include a 200-day moving average. (If you do this at thelibrary ask a teenager to help.)
Immediately it is apparent the 200 line moves up and down. When the line turns down Ė SELL. When the line turn up Ė BUY. That is how simple this is and how any investor can protect his money.
You now know more than 99% of brokers. Take charge of your account. Now.
Al Thomasí new book, ďIf It Doesnít Go Up, Donít Buy It!Ē, 3rd edition, has helped thousands of people make money and keep their profits with his simple 2-step method. The method made 10% during 2008. Read the first
chapter at http://www.mutualfundmagic.com and discover why heís the man that Wall Street does not want you to know.
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