Bull or Bear?

Cat or dog? Maybe Zebra. Shucks, I don't know, but my broker keeps telling me it is a bull and to buy this and that. It looks like he is right - for a change. I remember he said the same thing in 1999 and 2000 and I ended up losing most of my money. But it looks good right now.

Yes, it does look good now and I have been a buyer since the middle of last year. Is this another bubble? The talking heads on CNBC-TV say we are back in the bull market again.

My one rule has been to buy when the market turns up and it sure has done that; however, there is another rule that has kept me from losing money and that is to sell when the market starts going down. The nice thing about this is you don't have to be a market "expert" to know when this happens. All you have to look at is the price of one of the major indexes such as the S&P500 or the NASDAQ Composite to see when they penetrate their 200-day moving average. One that I watch all the time is the Investor's Business Daily Mutual Fund Index that is in the first section of the paper. You don't even have to buy it as you can read it at the library.

Anyone who tells you he predicts when or where the top or bottom of a market will be is usually guessing unless he has a proven real time track record of making those calls for many bull and bear markets. Predictors are usually wrong, but trend followers are almost always right. The reason is simple. Once the underlying facts, whether physical or emotional, come into play and a new direction is found the stock market will follow that course until another major set of facts comes into play.

This can be seen when the market becomes very overbought and overvalued as it was in 2000 and very oversold as it became in October 2002. A new set of circumstances were initiated and the general market took off in another direction. These long-term trends are relatively easy to determine by anyone who will to listen to the voice of the market.

Long term trend following has a drawback. You will not be a buyer at the bottom or a seller at the top because of the time delay, but you will never lose large sums of money as many did from 2000 to 2003. The use of this simple method will not require research or loads of useless information that Wall Street insists you need. You will be able to determine on your own when a major trend changes and then act accordingly to either buy or sell.

Those who have been wise enough to observe saw the trend change and became buyers last Spring and Summer and now have nice profits.

Yes, it is a bull.

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

http://www.mutualfundmagic.com; 1-888-345-7870

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