Students Of Success

Most people never forget their first love. I’ll never forget my first trading profit! But the $600 (1970 dollars) I pocketed on Royal Dutch Petroleum was not nearly as significant as the conceptual realization it signaled! I was amazed that someone would pay me that much more for my stock than the newspaper said it was worth just a few weeks earlier! What had changed? What had happened to make the stock go up, and why had it been down in the first place? Without ever needing to know the answers, I’ve been trading RD for thirty-six years!

Looking at scores of similarly profitable, high quality companies in this manner, you would find that: (1) most move up and down regularly (if not predictably) with an upward long-term bias, and (2) that there is little if any similarity in the timing of the movements between the stocks themselves. This is the “Volatility” that most people fear and that Wall Street loves them to fear. It can be narrowly confined to certain sectors, or much broader, encompassing practically everything. The broader it becomes, the more likely it is to be categorized as either a rally or a correction. Most years will feature one or two of each. This is the natural condition of things in the stock market, Mother Nature, Inc. if you will. Don’t take her for granted when she gets high, and never ignore her when she feels low. Embrace her volatile moods, work with them in whatever direction they travel, and she will become your love as well!

Ironically, it is this natural volatility (caused by hundreds of variables human, economic, political, natural, etc.) that is the only real “certainty” existent in the financial markets. And, as absurd as this may sound until you experience the reality of it all, it is this one and only certainty that makes Mutual Funds in general (and Index Funds in particular) totally unsuitable as investment vehicles for anyone within seven to ten years of retirement! How many Mutual Fund investors have retired recently with more liquid financial assets than they had seven years ago, way back in 1999? There will always be rallies and corrections. In fact, it is worthwhile to “go back to the future” to establish a realistic Investment Strategy. In the last forty years, there have been no less than ten 20% or greater corrections followed by rallies that brought the market to significantly higher levels. The DJIA peaked at 2700 before its record 40% crash in 1987. But at 1700, it was still 70% above the 1000 barrier that it danced around with for decades before… always a higher high, rarely a lower low. The ‘87 debacle was followed by several slightly less exciting corrections, but the case was being made for a more flexible, and realistic, Investment Strategy. Mutual Funds were spawned by a Buy and Hold Mentality; Mother Nature, Inc is a much more complicated enterprise.

Call it foresight, or hindsight if you want to be argumentative, but a long-term view of the Investment Process eliminates the guesswork and points pretty clearly toward a trading mentality that keys on the natural volatility of hundreds of Investment Grade Equities. During corrections, consider these simple truths: 1) although there are more sellers than buyers, the buyers intend to make money on their purchases, 2) so long as everything is down, don’t worry so much about the price of individual holdings, 3) fast and steep corrections are better than the slow attrition variety, 4) always accept even half your normal profit target while buying opportunities are plentiful, 5) don’t be in a rush to fill your portfolio, but if cash dries up before it’s over, you are doing it “correctly”.

Most of the problems with Mutual Funds and much of the increased opportunity in Individual Stock trading are functions of growing non-professional Equity ownership. Everyone is in the stock market these days whether they like it or not, and when the media fans the emotions of the masses, the masses create volatility that rarely under-reacts to market conditions! Rarely will unit owners take profits, particularly if they have to pay withdrawal penalties or taxes. Even more unusual are expert advisors who encourage investors to move into the markets when prices are falling.

A volatile market creates opportunities with every gyration, but you have to be willing to transact to reap the benefits. A necessary first step is to recognize that both “up” and “down” markets are forces of nature with abundant potential. The proper attitude toward the latter, will make you much more appreciative of the former. Most investment strategies require answers to unanswerable questions, in an effort to be in the right place at the right time. Indecisiveness doesn’t cut it with Mamma… in or out too soon is not an issue with her. But wasting the opportunities she provides really ticks her off! Successful investment strategies require an understanding of the forces of nature, and disciplined rules of portfolio management. If you can transition back to individual securities, you will do better at moving toward your goals, most of the time, because the opportunities are out there… all of the time.

So let’s adopt some new rules for this investment game and learn to live with them for a few cycles: Let’s buy good stocks new and old at lower prices during corrections. Let’s take reasonable profits on those that go up in price, whenever they are kind enough to do so. Let’s examine our performance based on the results of these trading transactions alone and at market cycle examination points for a smiley faced change of pace. And one other thing…

Let’s drink a toast to Mother Nature, her uncertainty, her volatility, and, of course, to our first loves.

Steve Selengut
www.sancoservices.com/
www.valuestockbuylistprogram.com/
Professional Portfolio Management since 1979
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”

When creating wealth in the stock market, you need to build a
certain understanding of the risks involved. How do you assess
the risk? When do you listen to other people’s opinion and when
do you make up your own mind based on training and research?

Well, for starters, don’t listen too much to others. Who is
going to look after your money best? You, of course! Then why
not learn for yourself how to be a stock market investor instead
of listening to advice from possibly unreliable sources.

To start with, learn basic strategies. If you understand how the
stock market works to a certain degree, then maybe you should
look at derivatives. These are highly leveraged investment
instruments and need to be understood properly to be used to
their full advantage.

Once you understand stock market derivatives (and you will if
you apply yourself), you can move on to more advanced strategies
and this will open up some interesting possibilities for you.

For instance: I invest with returns around 15 - 20% per month. I
learnt this with very little knowledge of how to be a stock
market investor. I achieved this in less than 2 years. I know
several investors who learnt this in 3 to 6 months.

There are also bad months. This is where money management comes
in. Learning to manage your investments with a proper strategy
and money management is vital to your success in the stock
market.

You have plenty to gain by learning from other enthusiastic
traders. Visit stock market or wealth creation forums. Learn
from other like minded people. A little bit of effort, fuelled
by dreams will get you a lot further than little effort with no
dreams.

Remember this is all about leverage. Learn to leverage yourself
and the income potential rises with it.

Many will say that the risk rises with the income potential. If
you agree with that, then read this quote by a very seasoned
stock market investor and think again:

“Risk is NOT understanding what you are doing” - Warren Buffet

Think about it. If you didn’t think - “YES, that’s true!”, then
read it again and again until you really get the point.

What some people perceive as risky, others do as an everyday
task, as if it is second nature. It’s just like having a casual
walk to the local shop.

Driving a car is risky. Especially if you haven’t driven before,
or have little experience. Maybe you haven’t bothered learning
the basic traffic rules.

How risky is it for you to drive a car when you know the traffic
rules, have made the effort to practise and stay aware of any
changes that may affect you in that environment?

Not very risky at all!

Same task. Very risky for some. Hardly any risk at all for
others.

Compare this to being a stock market investor. If you enter a
trade with little or no knowledge, it would be fair to say it is
very risky. Do it with base knowledge, research and networking,
then it would be fair to say that you have reduced your risk
dramatically.

The very same trade will have different outcomes depending on
how you react to the market place. Hence, the different risk
levels in the very same situation.

So hang in there. Utilise resources like stock market forums. Do
a course or attend a seminar to fast track your learning.
Educate yourself with things that WILL make a difference to your
future. Believe me, whoever said money doesn’t buy happiness,
either didn’t have any money at all or never went without.

Of course, money doesn’t buy happiness. But it sure does help. I
know which option I prefer.

Let me think. Here are my financial options:

Option number 1 - Little or no wealth.

* Work until I’m 65.

* Put my kids through average under funded schools because I
have no choice.

* Having to budget most or all of the time.

* Trying to make ends meet.

* Keep a relationship and a happy family while always struggling
to pay the bills.

* Have very few holidays.

* Constantly worrying about fuel prices.

* Have little or no money for charities.

* Etc, etc

Option number 2 - Plenty of wealth.

* Enough money.

* Comfortable living. Stress-less lifestyle.

* Work until I want to. NOT until I have to.

* Work as a hobby. Do what I want to do. With a passion!

* Put my kids in the schools I want to. It’s my choice.

* Support as many charities as I like. Make other peoples life
easier.

* Support my local community financially, because I can.

* Holiday as much as I like.

* Make ends meet ALL of the time. Who cares how much the grocery
bill is?

* What fuel prices? What’s the issue? When fuel prices go up, so
do my shares.

* Etc, etc

If I cannot be happy using Option number 2, then I’ve got some
serious problems!

You choose your own destiny. Don’t let others make up your mind
for you. Make wealth creation a part of your financial education.

Happy researching, and good luck to you in your quest for
financial independence.

A money club is a great place for people to get together and share thoughts, ideas and goals about money, planning, finance. Here people learn about finances and ways to reach ones financial goals. Friends in the money club provide encouragement that each member needs to succeed.

This is one major reason why money clubs have picked up significant momentum since their inception a couple of years ago. Their aim is not to evaluate price/earnings ratios, but to help members navigate pricky personal finance dilemmas.

In a time of economic unease, by joining a money club people can establish and follow through their personal financial goals, which may include improving money management, increasing ones savings for retirement, spending intelligently, saving for children’s education, diversifying portfolio, curbing debt and advancing estate planning or buying a home etc.
In order to have a successful club take certain precautions
A new investment club must have a solid structure to ensure the club’s agenda is carried out efficiently and without friction with legal agreements and bylaws in case the club invests jointly in order to avoid any unscrupulous person joining the club. make sure that the number of members is such that it is not too much to find a meeting place and also this would mean a higher retention and too much management would not be required.

An investment club must have a clear way of determining each member’s share at a given point in time as members are likely to contribute funds on a periodic basis, and may intend to withdraw funds from their share of the club’s assets at some time in the future.

Make sure that all members equally share the work. Pick a leader or rotate leadership. Stay organized. Help the members to learn and polish their stock researching capabilities, this way all the members can contribute.
There should be regular guest speakers and field trips so that the club members are able to sustain their interest instead of sticking to the same routine.

Meeting should be once a month since more of the meeting would be a burden for some people and if it is less than people would gradually loose interest. The meeting should be regular with time and venue set. Changing venues could be inconvenient for people and can derail them from their focus and subsequently lessen their zeal to attend.
Make sure that the members are performing correct maths. This will not happen if careful attention to paid to club accounting system. The National Association of Investors Corp. (NAIC) offers instructions and software on how to keep track of contributions and gains.

When looking for members of the club, one can select friends, coworker or search internet in order to make sure members have similar interest, goals and backgrounds for them to understand each other and contribute accordingly.

When a member attains a financial goal, it should be celebrated with adequate prize or gift certificate. This would drive competition and thereby encourage everyone to do well.

Mansi aggarwal writes about money clubs. Learn more at http://www.meetformoney.com

Markets go up and markets go down. It shouldn’t matter much, but many new market timers find that their own personal mood fluctuates with the markets, moving from extreme euphoria as the markets soar to new heights to deep despair when the markets plunge to new lows.

Why do market trends have such power over emotions?

They don’t need to, but many new timers have difficulty cultivating an objective mind set. They allow fear and greed to influence their trading decisions.

They tend to follow the masses, and when they go with the crowd, they soon find that market trends not only influence their moods but their account balance as well.

Following The Crowd

There’s a strong tendency to follow the crowd. There is a feeling of safety in numbers. When you see a steady upward trend, you feel secure. Everyone is buying. They are all doing the same thing.

When other people offer confirmation of your decisions, you feel safe and assured.

In a bull market, it isn’t so bad to follow the crowd. When it’s a strong bull market, the crowd is often right, and it makes sense to follow them.

However, when the market turns around, feelings of safety and security can turn quickly into fear and panic. Why? One reason reason is that many new market timers don’t have the ability or financial resources to sell short, and take advantage of a bear market. But there’s a psychological issue as well.

It is difficult to know how to handle falling stock market prices. For example, humans tend to be risk averse. When one is going long and the markets suddenly turn, it’s hard to accept losses, and sell off a losing position before more damage is done.

Denial and avoidance set in. At that point, a trader with a losing position panics, hopes that things will turn around, and waits for events that are unlikely to happen.

Usually the price continues to fall, heavy losses are incurred, and as expected, disappointment and despair set in.

Emotions And Decision Making

It’s crucial for your success as a market timer to stay calm and objective. Don’t let your emotions interfere with your decision-making.

How do you stay detached and relaxed? First, it’s important to accept the fact that you’ll likely see small losses as a timer and that you should expect to see the markets turn against you. Small losses are an unavoidable part of dealing with the stock market. The trick is, keeping them small.

Follow a trading strategy that is well tested such as those at Fibtimer. And stick with the plan.

Don’t allow your moods to fluctuate with the ups and downs of the markets. By trading in a disciplined, methodical manner, you can cultivate an objective, logical mind set that isn’t overly influenced by market moods.

Armed with the right mind set, a disciplined trading approach, and a well tested trading strategy, you will be able to realize over time, the profits of successful market timers.

Where an entrepreneur feels that a venture might have wide public appeal, or that some group of investors might be more comfortable with a formal division of ownership, the decision may be made to distribute stock in the corporation in proportion to ownership. For the protection of investors, this process is more tightly regulated than direct sales of ownership interest.

Simply stated, it is against the law to sell stock unless you are licensed to do so or can qualify for an exemption from the Securities and Exchange Commission (SEC) and the various states securities commissions’ rules. Let us take a look at some of the exemptions.

Regulation D

For some entrepreneurs, the best vehicle to accomplish initial equity financing under an exemption is through the use of Regulation D, which is a limited offer and sale of their company’s stock, or securities, without registration under the Federal Securities Act of 1933. Some risks continue under “D,” but compliance is significantly easier than before it existed. Under Regulation D, Rule 504 generally pertains to securities sales up to $1 million, and this is the rule most applicable to the ventures we are considering.

Rule 504

This rule is considered by many as the perfect answer for the company just starting out that needs to raise less than $1 million but cannot afford to go through the whole SEC registration process. Rule 504 offers such companies an alternative:

An exemption to raise up to $1 million, with no disclosure criteria

The total offering amount under Rule 504 can be up to $1 million in a 12-month period, less the aggregate offering of all securities sold within 12 months before the start of the offering. So, if a company has raised $100,000 in private money in the 12 months preceding qualification under this rule, it can still raise an additional $900,000.

Few general solicitation and resale restrictions

Generally, under Rule 504 there are no specific disclosure requirements, unless the state of issue imposes them. Theoretically, an issuer can have a purchaser sign a subscription agreement and purchase stock without any information about the company being disclosed.

Regardless of the amount of disclosure the issuer is willing to provide, Rule 504 does not dismiss the issuer from federal requirements, nor is there an exemption from fraud provisions, including the areas of material omissions or misstatements. The penalties for noncompliance are severe, including monetary fines and mandatory jail sentences.

Rule 504 allows the issuer to generally solicit, or advertise, for subscribers to an offering. Some states have been quite lenient in allowing it. However, in practice, very few issuers have advertised their offerings in newspapers or through other common media as was expected.

No limit as to the number or type of investors

Rule 504 is the only rule under D that permits an unlimited number of investors.

Regulation A Offerings

Under Regulation A, a company may also publicly offer its securities without registration under the 1933 Act. Instead, an offering statement (Form 1-A) is filed and “qualified” with the SEC. A principal attraction of “A” is that only two years of financial statements are required and they may be unaudited if audited information is not readily available. The limit of an A offering is $5 million in any 12 month period. Also, Form 1-A has been revised to allow the optional use of a “user-friendly” question and answer form.

Small Company Offering Registration (SCOR)

Form U-7, the basic registration/information form used in the Small Corporate Offering Registration (SCOR) was adopted by the Securities and Exchange Commission in 1992. In some states, this is called Uniform Limited Offering Registration or ULOR. It allows a company to raise up to $1 million by selling securities. The disclosure statement (Form U-7) is considerably less complicated than standard disclosure forms and is constructed in question and answer form; the SCOR/ULOR process is considered by many to be the simplest paper-work process used to complete an exempted offering ever.

The major drawback to the exempted processes is the complexity of the regulations, and the courts have shown a willingness to rule against the entrepreneur in their interpretations. The entrepreneur should not proceed without first seeking the advice of qualified legal counsel to determine the best form of exemption to apply for.

John B. Vinturella, Ph.D. has almost 40 years experience as a management and strategic consultant, entrepreneur, author, and college professor. For 20 of those years, Dr. Vinturella was owner/president of a distribution company that he founded. He is a principal in business opportunity sites jbv.com and muddledconcept.com, and maintains business and political blogs.

This day and age presents a large amount of opportunities to invest your money. But sometimes it’s difficult to choose the best investments that are suitable for your situation. If you are interested in investing your money in stocks then this article may be of assistance to you.

Below you will find ideas on how a little research can take the stress out of stock investing and hopefully fetch large returns from your stock investment.

Find Investments That You Trust
The best way to choose the right stock is to research a stock company to find information that may or may not be desirable. Consider only companies, which have been trading in the public market for a long period of time. These companies often provide extra security and stability for a well maintained and branched out investment portfolio. Use the information you get from stock market quoting to determine if you think the particular company is a fit for you. Periodically keep yourself up to date on the companies your investing in, just because a company is stable now doesn’t mean they’ll be around several years from now.

Search for Recent News
A good way to find profitable investments is by reading news stories that may influence the value of a companies stock in which you are going to invest your money. By updating yourself about the stock market you can be in touch with top stories of public companies, which can keep you informed about what is going on in the market (company’s stock value is going up or down). This can be especially useful if you get wind about major scandals or negative factors on time and are able to sell shares before the price drops. Alternatively this will also enable you to invest before an upcoming event that may cause a spike or upwards trend as well.

Keep an Eye On New Technologies
You should also read news about technological progress and fields like health care and biochemistry. New advancements in these fields can cause a sudden rise in stock prices, quickly earning you a nice profit. Learning about new and advanced technologies before they become well known, can potentially give you long term benefits and opportunities to engage your money in other investments. Don’t expect each and every new technology to cause an increase in stock value, but there is a better chance for making good profits from initial investments.

Invest for the Long Term
It is important to know about long term investments. Usually long term investments give more benefits than many short term investments. Many short-term investments also do well (scheduling your purchase and sell ahead of time can also save you some heartaches); long-term investments will add stability and security to your portfolio.

Find Yourself Some Good Help
With not too much trouble you will find many other people investing like you are. Ask around, there’s a good chance many of them use a stock recommendation service or a broker they’re happy with. In this case they’ll gladly recommend their services and if you’re new this may be a smart way to get started - this should also help you to avoid stock broker fraud as well.

Written by Chad McDonald for the investing newbie needing a angel investment broker or looking for the book called stock investing for dummies online.

(Please have a glass of water within reach before reading this article.)

Your personal financial planning is the topic of discussion here today, but not quite yet. First I would like to bring your attention to the issue of bragging.

The other day I was carrying on about how well our website was doing on the various search engines. If you typed in financial planning Victoria, or financial planner Victoria, or CFP BC, our site ranked very well on the major search engines. But I was not bragging about this to a dummy. Unfortunately not. Because this person, who shall remain nameless, asked me a very simple question:

“Is it working?”

“Huh?” I thought, feeling like I was suddenly part of a butterfly collection.

“Is it working? Are you getting new clients this way?”

The room was beginning the spin.

“Can I have some wa -wa?” I asked woozily as I crumbled to the floor.

Sometimes we get so caught up in the process of doing things, like optimizing websites for search engines, we lose sight of what standard of measurement we should be using to determine how we’re doing. In my case, I was using how well our website ranked for various search terms, instead of whether we were actually gaining any business from the web. Duh!

This often occurs where peoples’ financial planning is concerned. It is very easy to get stuck in the process of saving money, or managing money, but lose sight of whether or not what you’re doing is actually working to help you achieve your goals. So, if you think about your financial goals, and then think about how you are doing, the same question applies…

“Is it working?”

There are three possible answers to this question and they are: “Yes”, “I don’t know”, and “Can I have some wa –wa?”

Realizing that what you are doing is not working, is not pleasant. Nor is it pleasant to realize the giddy pleasure of progress you thought was your lot, is no more. You may look a bit ridiculous to yourself for a bit, but if you’re like me, that’s nothing new.

So, for example, if your primary financial benchmark is retirement, does it look like you will be able to retire when you want, with the kind of income you need?

“Hey! You okay? Wake up. Here. Drink this.”

About The Author

Rick Hoogendoorn is an ‘associate’ and misguided webmaster with Cheri Crause & Associates Inc. Cheri Crause is a certified financial planner in Victoria, BC.

rick.hoogendoorn@shaw.ca

Part of learning to become financially free is to begin to understand that there are three different types of income. They are: capital gains, passive income, and earned income. They are the three types of ways to make money, and are very easy to understand.

Capital Gains - When you buy a stock, and sell it for a higher price, you have made a capital gain. If you buy a house and then later sell it for a profit, you have made a capital gain. If you buy an antique at a low price and then sell it for a nice profit, you have made a capital gain. Capital gains are not passive income. They are a one-time payment that you receive from an investment because your investment has increased in value. Investing for Capital Gains is great because you can keep your money moving, instead of just letting it sit in the bank. The government loves to tax capital gains, especially if you bought and sold your investment in less than one year. Lets say you buy a stock, and the stock doubles in price during the week so you decide to sell it. You’ve made a nice capital gain, but the government could take as much as 35% on that capital gain, depending where you are in the income-tax bracket. If you hold onto your investment for a year or more, the government rewards you with a more favorable capital gains tax rate.

Passive Income - Passive income is payments that you receive from the assets you have created. These payments usually come monthly, and require little or no work for you to receive them. Some types of assets that produce passive income are rental properties, dividend stocks, and businesses. Assets that produce passive income continue to do so until the asset is liquidated (sold). Passive income is what makes a person rich. If a person has more than enough passive income to cover his or her expenses, that person is rich.

Earned Income - Earned income is the primary source of income for most American’s today. Any type of job that pays an hourly wage, pays earned income. People who rely only on earned income, pay the most taxes. Federal, State, Unemployment, Social Security, and Medicare taxes are all deducted from a persons paycheck. With passive income and capital gains, the types of taxes you pay (if you have to pay any at all) depend on your investment. Earned income is not necessarily a bad thing. Having a job or career is a great way to earn the capital required in order to create assets.

Almost everyone who starts his or her own journey to financial freedom begins with earned income. Relying solely on earned income should be temporary. In America today, many people rely on earned income alone, and saving most their earned income for many years until they retire. The path to financial freedom requires making the transition from relying on earned income, to passive income

Michael Press is an investor and teenage entrepreneur. He currently owns and operates www.passiveincomeinfo.com and www.promoteyourarticles.com.

All stock trading and investing methods must deal with the inevitable drawdown from the most recent peak in one’s stock trading curve to a bottom before reversing and making a new high. Seasoned systems traders are well familiar with the drawdown phenomenon and the importance of drawdown as a percentage of annual average returns in evaluating a trading system. On the other hand, many “investors” that follow a “buy, hold and hope” approach to the markets for the long term, don’t think in terms of a drawdown when their portfolios drop in value by 10%, 20%…75%, as has happened in the past few years. But what they have experienced is an stock trading curve drawdown.

Systems traders know that if they are following a “good” system that gives them a winning edge, in order to “cash in” on what that system has to offer, they must have a strong commitment to following each and every trade recommendation, even if the system is currently experiencing a drawdown. They are emotionally and financially prepared to do so because they already know the historical maximum drawdown that the system has incurred before making new stock trading highs. They also know that the worst time to abandon a system is just after a drawdown and just before, it surges to new highs.

“Buy, hold, and hope” investors, on the other hand, are committed to holding no matter what. But that commitment is misplaced, because “buy, hold, and hope” is not a winning methodology. Commitment without a “good” system, or a “good” system without commitment, is both recipes for failure.

You need two things to win in stock trading. A “good” system or methodology and the commitment to follow it without fail especially through the inevitable drawdown periods.

If you would like to learn more about stock trading and you have a computer and a burning desire to seize success, then you have what it takes to personally
unearth Bill’s Astonishing, step by step trading secrets… BUT ONLY FOR A LIMITED TIME. http://www.instantprofitstoday.org

Whenever I see mutual fund comparisons in the trade publications and in the financial section of the newspaper they almost always mention a specific fund and tell you how good it is in relation to its peer group. A peer group is a specialized sector of mutual funds that all invest in about the same type of stocks or areas of the world or size of companies or some such categorization.

Does this help you make money?

No.

Why?

You have several dogs. A minature poodle, a regular poodle and a very large poodle. On the outside they look very similar, but in performance they can be very different. In a race with a greyhound they will all lose. In a tracking contest with a beagle they will not be able to find the possum. In a contest with a retriever they will not get the bird as quickly. However the large poodle is bigger stronger and can do more than its counterparts. So what? You have the wrong dog for the job.

When you go hunting you don’t want a poodle you want a pointer, setter or beagle depending upon the prey. When you invest your hard-earned money in a mutual fund you want the best performer for the type of hunt in which you are engaged and that hunt is for maximum appreciation of your investment. Your prey may change form (from a duck to a possum) and as the prey changes so should the animal (fund) you use (invest) also change.

If you had stayed invested in the best technology fund you could find a year ago, the best one in the entire peer group, I can guarantee you have lost money. The sector has lost more than 75% of it value. It makes no difference if you have the best dog of that breed. If it can’t do the job you must change dogs. (Pun intended.)

The important thing to remember when choosing a mutual fund is to find one that is in a sector that is strong NOW, not a year or 3 years ago. When you go back for 3 years or 5 years you will find that there has been a period of time when that sector had or has a very big decline in value. When ANY fund starts down more than 10% to 20% (you decide) it is time to sell it for another fund that is still increasing in value.

When we are in a bear market, as we are now, you may not be to locate one that is going up. Do not listen to any broker who says that a group cannot go any lower. You must wait until you see it increasing in value every week for at least 2 months or more before committing any funds.

You only want to be invested in the best no-load fund in the strongest peer group at all times.

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