Credit Card ’s Talk

Humpty Dumpty had a great fall and all the King?s horsemen could not put Humpty Dumpty back together again.

The Stock Market has had a great fall and all the brokers, CEOs, analysts and politicians have not been able to get it back up again.

Oh, it will go up again, but if history has a way of repeating it will be a long time before we see it at ?even?. From 1920 to the present there have been 3 major bull markets lasting close to 16 years. Unfortunately, each has been followed by a bear market of about the same length of time. So far we are ending the 3rd year of the projected down cycle with only 13 more years to get to the bottom. It is a long way off.

At a recent investment seminar one of the speakers asked his large audience if they believed the stock market would be higher 5 years from now. Every one except one thought it would be. The current mindset of most investors believes this also. For the period from 1982 to 2000 (18 years, close enough) there has been a bull market. Every investor has considered himself to be a financial genius during that time. There is an old saying, ?The market makes fools of us all ? sooner or later?.

Unless you learn to listen to what the market is saying and not your broker, you will be able to recoup some of your losses, but probably not all. During this long-term bear called a secular bear market, your main effort will not be to make money but to keep from losing more. During a bear market the one who loses the least is a winner. You may not like what I say, but history has that strange way of doing it over and over.

Maybe I am wrong about it because ?this time it is different?. I hope so, but you can protect your money in your 401K or elsewhere with a simple loss limit order. Call your broker and have him place a 10% (or whatever number your prefer) stop-loss order on all your positions. That way you don?t guess about where to sell; you let the market tell you when it has turned weak.

Brokers and brokerage companies hate stop-loss orders and will try to talk you out of it. Ask him if he will guarantee your portfolio. You can bet he isn?t that dumb. It is your money. Once it is gone you will have very little chance of getting it back. Protect what you have left.

Don?t be a Humpty Dumpty!

Al Thomas

Author of If It Doesn’t Go Up, Don’t Buy It!

Never lose money in the stock market again.

http://www.mutualfundmagic.com

On Friday or Saturday evening my wife gets a movie from Block Buster and after dinner we sit, hold hands and watch. This week she brought back one that I think every investor or anyone contemplating investing in the market should see. It is called Boiler Room.

How many times have you been called out of the blue by some no-name broker who wants to make you rich provided you buy shares in this great new issue or some stock that is just about to take off.

Usually they start off with do I remember he called me 6 months ago and recommended so-and-so issue that is currently in the news because it has gone up 100 or 200%. He did not make that call and if he had I am sure I would not remember it. Also the name of his firm is one I never heard of, but it sounds very legitimate and he might even say they are affiliated with Chase Manhattan Bank or some other big bank. They might have their checking account with that institution, but otherwise they have no connection with them. Now he has another recommendation that is going to do even better that that one. Yes, and pigs can fly!

If you haven’t done so yet don’t let him go any further. Hang up. Oh, I know you can’t because your mother taught you it is rude to hang up on people. Please, this time DON’T listen to your mother. He will try to get you into a conversation by asking simple questions that must be answered with a Yes. Stop listening. If you can’t bring yourself to hang up then put the phone down and walk away. In 10 minutes he will be gone to call another sucker.

There really are boiler rooms out there selling worthless securities and everything they do is 100% within the law and 100% immoral. How do I know this? I used to own a brokerage firm and I received monthly reports from the regulatory agencies outlining charges against these shady dealers. Fortunately, I did not have those problems as I would not allow hype to open accounts.

The things being told on the phone are usually too good to be true and that is a fact. Do yourself a favor and rent that movie. Not all brokerage firms are like this, but remember my basic rule.

NEVER SEND MONEY TO A VOICE ON THE PHONE.

Al Thomas’ book, If It Doesn’t Go Up, Don’t Buy It! has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005

There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally. When it looks like shooting will begin momentarily the market takes a dump. What should you do with your stock, mutual funds or cash that is waiting to find a home?

Back when I was a floor trader we had a saying ?When in doubt get out?. And that applies just as strongly today to everyone whether you area professional trader or a retired person living off your equity income.

You might say that I am not a trader or speculator so I won?t do anything. Let me clarify what you really are. You are a speculator whether you want to admit it or not. The only thing that separates you from the floor trader who is scalping for a few ticks and someone who has thousands of dollars in a retirement account is the time frame. If all you do is buy and hold you still are a speculator. You are hoping the market will come back. Your broker told you so.

What your broker did not tell you is that long-term bull markets are followed by long-term bear markets of equal length. Because we have been in a long-term bull from 1982 to 2000 the mindset of the investor has become conditioned to believe the every correction will see another new high. That is true, but can you afford to wait that long? In the crash of 1929 ? ?32 it took almost 25 years to see a new high in the market averages. Do you have that much time? Also folks don?t remember that many companies went out of business so your ?average? went out the window.

With the market so precariously perched it might be best to stand aside with your cash in your hand or under your mattress. When the Iraq war starts we could see a 1,000-point move ? and it could be either direction. What kind of a gambler are you? We?ll see.

Ask yourself this question: Is this bear market caused by Iraq? Back in 2000 no one knew where Iraq was on the map much less were able to spell Baghdad. We can?t blame Saddam for the loss of about 50% of market equity. When it comes right down to it the Iraq war is just another event in a long-term bear market just as 9/11 was. Events do trigger violent moves, but the overall trend is what is important and now that is down.

Another old saying is ?don?t fight the trend?. War or no war the safest place for your money is not in equities during this down phase. Cash or bonds are the only place to be.

Are you ready for the next violent move?

Al Thomas

Author of If It Doesn’t Go Up, Don’t Buy It!

Never lose money in the stock market again.

http://www.mutualfundmagic.com

Mutual funds are a collection of stocks and/or bonds invested in different securities, which include fixed market securities and money market instrumentals. It facilitates investors to put their money under an efficient investment management. There are three types of mutual funds namely, income funds, growth funds, and balanced funds.

The basic principle underlying mutual funds is to pool in money with other people to convert it into funds. Mutual funds generally buy shares in stocks wherein an experienced fund manager performs the task of selecting, purchasing and selling off the stocks himself. Certificates are then issued to the shareholders as a testimony of proof of their partnership and participation in the emoluments of funds.

There are particularly three ways in which you can make money from a mutual fund. They are:

1. Benefits can be earned from the commission on stocks, and interests on bonds. All the income received all round the year is paid by the funds in the form of a distribution.
2. The fund will have an outstanding benefit provided the funds sell high priced securities. Most of the profits are given back to the investors in a distribution.
3. The value of the fund?s share automatically increases with an increase in the value of unsold high priced fund holdings. Accordingly, you can always sell shares of your mutual fund for profits.

Many people find investing in mutual funds an attractive option to that of dealing directly with the stock market because it is comparatively safe. In fact, these days, mutual funds have become the first preference of many investors. Mutual funds provide a balanced and better approach compared to conventional stock market alternatives. It has an added advantage of investing in several distinct sectors and firms, so, if one company suffers losses, the others may be rising. Investing in mutual funds, therefore, minimizes the loss-bearing risk of monetary assets.

In a nutshell, here are the salient points of the advantages of mutual funds:

1. Cost-effectiveness of investing in mutual funds: The main advantage of investing in mutual funds is the efficient management of your finances. Investors buy funds because they lack the competence and time to manage their own portfolio. It is a cost effective method, especially for a small investor because it is expensive to get a manager to manage individual investments.

2. Diversification: Compared to individual stocks or bonds, mutual funds diversify the risk of bearing loss. The basic intention being to invest in a diverse number of assets in order to overcome the negatives of loss making stocks or bonds by the profits reaped by others.

3. Economy of Scale: The transaction expenses are relatively low as a mutual fund is bought and sold in large amounts of credits.

4. Liquidity: Mutual funds provide the opportunity of converting shares into cash at any point of time.

5. Simplicity: It is easy to buy a mutual fund. Most companies have their own automatic purchase plans, and the minimum investment rates are very small.

Therefore, investing in mutual funds is certainly a secure investment as the chance of loss is spread out, and the opportunity for gains are numerous. At the same time, it is both cost-effective and an investment that gives great future returns.

The days of depending on government largesse in meeting old age financial requirements are growing dimmer by the day. Hence, investing in mutual funds can be a wise choice, especially for those who plan for an early retirement and hope to enjoy a secure senior citizenship.

Joe Kenny writes for the UK Loans Store offering UK secured loans and offer more information on UK bad credit loans and other loan topics available on site.
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