Low Tide

When you stand up on the ocean shore and ticker the moving ridges breaking you might go aware that the tide is coming in or going out. It is a slow procedure to watch the H2O withdraw and when it finally gets to its lowest point it is almost impossible to state if it have stopped or will retreat further. Plenty of moving ridge action, but going nowhere.

This reminds me of our current stock market. It still looks like the tide is going out because for the last 2 calendar months all the major stock indexes have got been inching down. Even the talking caputs on CNBC are saying you must be cautious. They would be fired if they told you to sell. How can you state what is tam-tam on? Almost every analyst and broker looks at the major market indexes – the Dow Mother Jones Industrial Average, the S&P Five Hundred and the Nasdaq Index. On the surface they look very negative.

The DOW is composed of 30 large companies. The S&P500 have 500 companies of many sizes, but the number (index) generated is weighted by the size of the company. The bigger it is the more than it impacts the index. And the Nasdaq is smaller companies and have got got more than of the high technical school corps that have been hit so hard and are still having mucho trouble. The professional bargainers and common monetary fund managers associate more than to the S&P500. Almost all domestic stock common finances have got been lower in terms for the first quarter.

Even though the S&P have been slipping it is interesting to observe that 300 of the 500 pillory that do up the index are HIGHER. Yes, 60% of them have got continued to advance, but it doesn't demo - yet. When a market is changing directions it is similar to watching the tide halt going out and slowly change. That is what is going on now. The moving ridge action is there, but you can't see that the organic structure of H2O is now beginning to travel the other way.

There are some strong implicit in currents such as and the Small and Midcap Value stocks, Real Number Estate stocks, the Leisure grouping and Financials. This uses to picking individual issues as well as purchasing common finances that specialise in these areas. If you desire to be successful – brand money – in this market you must be with the strongest grouping so you must switch over from weak pillory and common finances to those that are currently strong. Fund managers state you to look at the 3 and 5-year path record and "stay for the long haul". All that makes is do money for him, not you. You must happen the no-load common finances that are going up the fastest during the past 3 and 6-month clip time period and purchase them now.

The lone manner to Buy and Hold is to purchase and throw only while they are going up and to sell them immediately when they begin to decline. Don't allow the weak pillory or finances carry your cash out with the money undertow.

Inertia

One of the basic laws of physical science is that a organic structure in movement will stay in movement unless disturbed by another force. What have this to make with the stock market?

For the last 2 old age the long-term trend of the market have been down with a few fleeting deviations. When a baseball game participant hits a ball it come ups off his chiropteran at full velocity and as it do its discharge through the air it slows down and is buffeted by the wind. Sometimes he hits a weak shot and once in a piece he gets a home run. You can almost state when it go forths the chiropteran whether it will be a good one.

On March 1 and March 4 the market came to the plate and it went up so fast and with so much energy it looks like we have got a home tally in the making. It have been my experience not to reason with an complete athlete. The jocks we are dealing with here are the professional bargainers such as as hedge monetary monetary fund and common fund managers. They have got come up forward and set their money where their oral cavity is. It looks like the ball is going to travel a long way.

You as the small investor will desire get on board while the ball is in the upward trajectory. Picking individual pillory is extremely hard as I discussed in last week's column, but it can be done if you desire to make the work. There is an easier way.

No-load common finances are the answer. Good 1s (that agency those that have got been going up steadily for the past 6 months) are relatively easy to find, Bash NOT bargain any monetary fund with a committee charge. If you do you will be starting in a hole and must creep out before you have got a opportunity to make money. Brokers will state you that the loading finances are better. They are lying.

There are respective topographic points to look. At the library you should see the Investor's Business Daily newspaper. In the Common Fund subdivision you will happen the top 25 finances for the past 6 months. This is not published every twenty-four hours so you will have got to look in respective issues to happen it. You can do a listing of the first 15 and in the same newspaper is the listing of all common finances you will see their toll free number. Call each 1 to be certain it have no committee charge or salvation fee. You can choose from this grouping for your investments.

If you don't have got a computing machine at home usage the 1 at the library and travel to www.smartmoney.com. Under common finances they will demo you a listing of the best acting finances for the past year. They also demo if they have got a committee charge. From this listing you will be able to purchase some very good no-load funds.

Which 1s you purchase are not that of import as long as they are going up. Never maintain any monetary fund that is not on one these lists. When they halt going up it is clip to sell them.

The Information Age

It is fantastic to be alive in the information age. We cognize in a matter of seconds the change in the value of gold in Switzerland, the death of a human race leader or the birth of a provincial in Israel.

We are inundated with facts and figs and the emotional trials of both celebrated and ill-famed people. Can we possibly absorb all this? Bashes it assist us in our day-to-day lives?

When you get to analyse it you recognize all this information is just an agglomeration of material and incorporates no wisdom. If you were to memorise the Encyclopedia Britannica would that do you wise? Not really. You might cognize all about everything and you could reply inquiries on any subject, but unless you could correlative the facts and understand their interaction it would be of not much usage at all.

I am in the financial industry. Would it assist me to do more than money to have got memorized the Morningstar Manual? Oh, I would cognize the pe ratios and earnings of every company and a batch more, but will all that information state me if the terms of a company's stock will travel up? Again, not really.

Wall Street have the public believing the myth that you must make research; happen out everything about a company, its rivals and that industry. Now that you have got done that and all the figs state that according to conventional wisdom this is a "good" company makes that average the stock terms will travel up? Not really. When you make your historical survey you will happen there is hardly any correlativity in terms grasp and the fact it is a "good" company.

Financial research is worthless. If it were wisdom everyone would be rich.

The ground Wall Street brokerage companies take a firm stand you do nonsensical research is so you won't litigate them when their "recommendations" don't make you any money. There is only one thing you really need to know. Are the terms of the stock steadily going up? The simple manner to make this is to check the weekly shutting terms for the past respective years. You can get this information at the library. If it have a nice steady upward way what more than make you need to know? Everything that is known about this company is reflected in the last terms transaction. In that terms you are seeing all the world's research.

Information per se is not wise. It is the intelligent application of information that is wisdom. Apply your ain common sense wisdom. Don't listen to Wall Street.

Stops Make Money

During the twenty-four hours I watch CNBC-TV, the stock market channel. Fortunately, I maintain the sound hushed or I would be hollering at the dense "experts" being interviewed. The experts look to cognize all about the market except they don't cognize how to protect their capital.

Every few proceedings there is a chart in bright yellow of some stock screening its terms public presentation during the past year. Lately it looks that most of the pillory have got lost from 50% to 80 or 90% of their value.

Oh yes, this beauty did travel up from 20 to 120, but is now back to 20 or some number very fold to erasing almost all of last old age profits, many departure to a loss. The observers give a nice running play account of the "reasons" this stock did what it did. All hindsight and we cognize hindsight is 20/20.

Not once have got got I heard one these aces ever suggest that a trailing halt would have sold out the stockowner at a nice net income within 10 or 20% of the top of the move. Microsoft went to $120 and proceeded to lose 50% of its value, dropping to $60. If you had had a distant trailing halt you might have got been sold out about $90 or better. If you are still in love with MSFT you may now purchase many more than shares than you had before. Brand sense?

There is a right manner to utilize stops, but the best is a mechanical method. Just put an amount you are willing to give back. Some bargainers urge an 8% stop, others 15% to 20% of the low of the former hebdomad placed with your brokerage firm each Monday morning time as a Good-Til-Cancelled sell order. There is also the simple stopping point below the 20-day moving average computed weekly. And many others. If you care anything about your money you might desire to make some survey to see the type of halt you might wish to use to protect your capital.

Most professional traders, and I cognize most people are not professional adequate to make this, will put their sell Michigan below what they see to be critical support. This is a matter of reading and necessitates experience. I can almost vouch your broker doesn't cognize how to make this so you should follow one of the mechanical methods. When your stock or common monetary fund is making that loud swishy noise going down the porcelain container your broker always come ups up with the sage advice, "You are in for the long term" or "The market always come ups back". In your lifetime?

Take a expression at some of the domestic dogs you are carrying in your portfolio right now. Figure out what would have got happened if you had set in a trailing stop. My experience of trading for more than than 30years have shown that if you had been stopped out that within 60 years that stock will be trading lower than your sell terms about 80% of the time.

The first regulation of investment is to protect your capital. Use stops.

Protect Your 401K

Checked your 401K lately? Going back to about a twelvemonth ago many of these retirement accounts have got shrunk by 30%, some even more. What Happened?

You have got got been putting money in for old age and your employer may have been contributing to your program also. It is not supposed to get smaller. You are planning to pass that money some clip in the hereafter when you make up one's mind to discontinue working. Along with your Sociable Security payments you should be able to keep your current lifestyle. But not if your 401K and individual retirement account maintain going down and down.

The is no shortage of bad intelligence when common finances such as as Fidelity Magellan is off more than than 30% and Janus 20 is down 63% and I could travel on and on. Now you have got a crisp hurting in your tummy when you read your statement and when you name your broker he gives you the old song and dance about being in there "for the long haul, don't sell". It is not his money.

If you have got your 401K with your employer who have a "professional manager" delight don't fault the boss. He is at the clemency of that "professional" too who is slowly having you all spell broke. These money mutilators are taught the three great myths of Wall Street - Make Research, Buy and Hold, Dollar Cost Average. These philosophies have got got been promoted for so many old age that they have go conventional wisdom. You don't need anyone to state you they make not work. All you have got to make is analyze the results.

Buy and Hold is the top slayer of profits. I know. Almost every broker will never state you to sell when your stock or common finances begins declining yet every professional bargainer will have got got got that as his first rule: have an issue strategy when your investing starts to either lose money or take away net income you have made. If you had been an proprietor of Janus 20 when it went from 40 to 94 and had a planned issue strategy you would have got sold out close 80 to protect your profit. Now it is trading about 35 and after 2 old age you have got a loss instead of doubling (and keeping) your money.

How can you protect yourself against this type of loss? Don't trust on your broker or financial planner. They have got too many clients to be able to watch your money. I said your money. You are the lone 1 who cares. And if you don't desire to take an interest in protecting it then you will be eating domestic dog nutrient instead of steak at age 65.

As the common finances travel up in your 401K or individual retirement account you must take a few proceedings once each hebdomad or at least once each calendar month to check the price. As you saw the $40 monetary monetary fund advance you put a mental stop-loss value of from 7% to 15% and when it travels down to that terms you must immediately transfer those finances either to a different fund that is still advancing or to a Money Market account. It is that simple and there is nil complicated about it.

If you don't protect your retirement account no 1 else will. Start today.

Social Insecurity

Just about everything you have been told about Social Security is an obfuscation. That is a big word for convoluted truth or lie.

In a recently published obscure government document by the presidential Social Security commission there are two pages that expose the truth. Neither Democrats nor Republicans want you to read this. Shining the light of truth on the weirdness of politicians seldom makes them happy; however, you owe to yourself to know the truth.

When they take out from your paycheck for FICA - that's the SS deduction - the money is sent to the Social Security Trust Fund. Your money is held in the fund for some future date when it is returned to you upon retirement. During that time it is gaining interest at about 2%. Pretty shabby, but better than nothing. This is all well and good as long as the money is really there, but it isn't. What?

Now follow me with this beautiful bit of political sleight of hand. The money is invested in U.S. Treasury bills. Good, sound and safe as it gets. Right? Wait. Let's understand what has happened here. The Federal government has issued pieces of paper called Treasury bills which they have created out of thin air and replaced your real money. The Fed has borrowed your money in the "trust fund" and given you a promissory note in the form of a Treasury Bill. That money has now been transferred to the General Fund where our honest politicians spend it on whatever piece of pork they want. That does include necessities such the Army, Navy and Marines, welfare recipients and government employees like Senators and Congressmen.

Let's jump ahead to your retirement date maybe 20 or 30 years from now. You and thousands like you have been putting in billions for all these years and Uncle has been printing T-Bills. Now you want your money back. Shucks, anyone knows you just cash in the T-Bills. Where does the money come from for the T-bill? From the government that created it. That means those funds must come back out of the General Fund, which is composed of taxes. But they already spent it. It's gone. Something is wrong here.

The Fed took your money and put a piece of paper in its place as a promise to pay when the time came, but they did not back it up with anything except a promise to pay. All returns to SS retirees comes back out of payments by others now paying into SS. But what if there is less money being deducted for FICA at that time? It is called a shortfall. What the Fed has created is a giant Ponzie scheme where the first people who invested in it get paid, but those who came in later get less, little or maybe nothing.

As long as there is a Federal surplus or a balanced budget you are OK, but when that disappears it means taxes on everyone must be raised to pay for the SS benefits. Smoke and mirrors.

Politicians don't want you to be able to invest any of your own money because it means they will have less to spend and could care less what happens 10, 20 or 30 years from now as they will be long gone.

That is the truth about your Social Security "Trust Fund". There isn't any and never has been.

Perhaps we were asking the wrong questions this past election.

Our Senators/Congressmen do not pay into Social Security, and therefore they
do not collect from it. Social Security benefits were not suitable for them.

They felt they should have a special plan. Many years ago they voted in their
benefit plan. In more recent years, no congressperson has felt the need to
change it. After all, it is a great plan. For all practical purposes, their
plan works like this:

When they retire, no matter how long they have been in office, they continue
to draw their same pay until they die, except that it may be increased
from time to time by the cost-of-living adjustments. For example, former
Senator Bill Bradley (New Jersey) and his wife may be expected to draw
$7,900,000 over an average life span, with Mrs. Bradley drawing $275,000.00
during the last year of her life. Their cost for this excellent plan is zero,
nada, zilch.This little perk they voted in for themselves is free to them.

You and I pick up the tab for this plan. Our tax dollars at work! From
Social Security, which you and I pay into every payday for our own
retirement, with an equal amount paid in by our employer, we can expect to
receive an averageof $1,000 per month. We would have to collect our benefits
for 68 years and 1month to equal the Bradley's benefits.

Imagine for a moment that you could structure a retirement plan so desirable,
that worked so well, that Railroad Employees, Postal Workers,and others who
were not in the plan would clamor to be included. This is how good Social
Security could be, if only one small change were made.

That change would be to jerk the Golden Fleece Retirement Plan out from under
the Congressmen & Senators. Put them into the Social Security plan with the
rest of us. Watch how fast they fix it!

If enough people receive this message, maybe a seed will be planted and maybe
good changes will evolve.

Our girl Hillary Rodham Clinton now comes under this Congressional Retirement
Plan. Sspeaking of the Clinton's, it's common knowledge that in order for her
to establish NY State residency, they purchased a $million-plus house in
upscale Chappaqua, NY. Makes sense.

Now, they are entitled to Secret Service protection for life. Still makes
sense. Here is where it becomes interesting. A residence had to be built in
order to house the Secret Service agents. The Clintons now charge the Secret
Service rent for the use of said residence and that rent is just about equal
to their mortgage payment, meaning that we, the tax payers, are paying the
Clinton's mortgage.

And it's all perfectly legal.

How To Pick A Mutual Fund

Mutual finances by definition are a amalgamated bag of stocks, chemical bonds and a small cash. Their terms per share is the NAV, Net Asset Value of the sum amount of money in the common monetary fund divided by the number of shares. They seek to be fully invested at all times.

The monetary fund manager determines which pillory and chemical bonds to purchase and sell in order to give the top tax return to his shareholders. He is considered to be an expert in choosing pillory for grasp of value and should be expected to give a better than average return. That's why he pulls down a six-figure income.

You are encouraged to pick a monetary fund that have your end in mind. Are it considered conservative, speculative, income oriented, growing or some other category? Wouldn't you state one of the rule grounds was to have got the top tax return on your money? Bash you desire an average tax tax return or make you desire an above average return?

What is average? There is an index which you hear about on the intelligence every twenty-four hours called the S&P500. Because it is composed of 500 different pillory it is broadly representative of the market as a whole and therefore called a market average or index. You certainly would desire a monetary fund that is doing better than average.

You are encouraged to read the prospectus. Did you recognize that the twenty-four hours it is printed much of the information in it is over a twelvemonth old? It is written for the regulators in Washington, not for investors. It is worthless. Throw it away.

There are loading finances that charge a committee and no-load funds that make not charge commission. There is no cogent evidence that paying a committee will supply you with a better return. Buy your no-load funds direct from the monetary monetary fund or through a price reduction broker.

You are told to happen a good fund manager. Assorted money magazines listing them. Investor's Business Daily makes a characteristic narrative on different monetary fund managers respective modern times each week. Check to see if his monetary fund is outperforming the S&P during the last 12 months. There are very few monetary fund managers who have got a consistent record and even the best of them gets cold once in a piece and have a losing streak. You desire your money returning at upper limit at all modern times so you can't remain with one manager when he is running cold. Change funds.

One of the Wall Street myths is that you should set your money into a "good" monetary fund and allow it remain there for years. This is promoted because common monetary monetary monetary monetary fund managers are compensated by the amount of money they have got in the fund and not for public presentation of the fund.

So how make you pick a fund? Very simple. It must outperform the S&P500 Index. Any common monetary fund manager who cannot beat out a market average should not be holding your money. Check out your finances today.

Political Investing

We have got got two campaigners for president that have really different ideas on how to do the economic system grow.

Bush believes in the entrepreneurial approach. People should be allowed to put in themselves. He even desires to allow people have got some of the 15% that now travels to the Sociable Security "trust fund". Folks, there ain't no such as thing. All the money the authorities takes out of your paycheck travels into the general monetary fund and the politicians pass it as they take for "your best interest" provided it cooccurs with theirs. Americium Iodine being too cynical?

Gore believes the authorities should take care everything and everyone. The more than dependence of the people on the authorities the better because the dependants will look to him for what they need and maintain him in office. Forty percent of the people in this country wage no taxes at all.

But what is the of import thing that volition do the stock market travel on to go up? Are Shrub better than Al Gore for the market? Or visa versa? Are a Democrat better than a Republican for the stock market? Or visa versa?

Historically the market coatings the twelvemonth up 14% when the incumbent political party prevails. The Dow travels down 3% when the political parties change in the White Person House. It would look Mr. Al Gore would be a better bet. But small George have proposed a program that would give wage earners the right to set 16% of their paysheet taxes into a private investing account. This would certainly fuel the stock market.

Who takes care of those who make a poor occupation of investment and lose all their money? We are already taking care of them. Did you cognize the tax return on investing for Sociable Security is about 2 1/2%? A money market monetary fund earns twice that. Yes, there will be some World Health Organization make lose that small personal investing account; however, there will be many more than who make well and will have got a better lifestyle for their personal efforts. There will be another bear market and all the sheep will be sheared.

Right now the economic system is so strong that Mr. Greenspan is doing his best to slow it down. And we are in a strong human race economy. Even Germany and French Republic have got finally learned that the manner to excite their country's growing is to lower taxes. It have been an expensive lesson for them. Lower taxes intend more than money for people to pass and invest, both of which excite the economy. Democrats needn't worry that there will be less disbursement if they should lose the White Person House as the Republicans cognize how to pass as well as they do. Cynical again, huh?

When it come ups right down to which adult male will make better or worse for the stock market it is a toss-up. The difference is made in Congress, not in the White Person House. The president seeks to maneuver the United States Congress to move on his beliefs. One of the things few people retrieve - it is best to have got opposing positions between the executive director and legislative subdivisions of government. A Democratic president is balanced off by a Republican Congress. And visa versa.

We'll just have got to wait to see what this adjacent election brings.