I have watched my cat play with a bag of catnip. At first he is having fun and slowly he becomes drunk with pleasure and then finally he becomes so tipsy he falls over to sleep it off. The pleasure part is great, but I am not sure if he awakes without a hangover.
Rocket (that's his name) reminds me of a one of those people who buy a stock and hold it. At first while it is going up there is great pleasure and then euphoria until they know they are market geniuses. That's the drunken stage. Finally when the market turns against them they fall over not having enough sense to quit (sell) and later when realization returns they have a huge hangover (called hindsight) - and no money.
Can these 4-footed animals teach us 2-footed beasts anything? Can we be smart enough to quit while we are ahead? Rocket (and his friends) continue to make the same error time after time. We are supposed to be smarter so let's learn from their misconduct.
If you own stocks and/or mutual funds and the market is going up it is super catnip and we keep buying knowing that somewhere over the rainbow we are going to be rich and retire like kings. Almost none of today's investors ever think about selling. Wall Street tells us to buy and hold. They don't want you to sell because if you do they quit making money. Brokers make nothing on money market accounts.
Today with money market accounts paying less than 1% investors know the market will come back up. That is what all brokers preach. That is their catnip; their promise of better times ahead (with no plan to protect your cash). If they take that catnip promise away you might sober up and get rid of those losing stocks and mutual funds.
The great mother of all stocks, AT&T, well, it used to be, has dropped from $100/share to $14. What are those widows and orphans eating for supper now? Not steak. Maybe cat food.
When your equities are no longer rising and many are declining it is time to exit the market. Give up the catnip. When the trend stops its upward angle it is time to sell. Of all methods of investing the safest and most reliable is trend following. It is the catnip on the way up, but when the trend starts to decline you realize you are one smart cat and you are sober and walk away (sell).
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
green cleaning service Glencoe ..For years investors have been taught to look into the... Read More
The stock market is very unstable at this time going... Read More
Stock trading remains a very competitive field and the stock... Read More
If you have been watching the stock market at all... Read More
Question: How does it get better when it gets worse?Last... Read More
Jack and Jill went up the hill to fetch a... Read More
The stock market can present you with a lot of... Read More
The stock market has not been very kind to your... Read More
Even if you don't own any of their stock or... Read More
You have heard about a particular mutual fund from a... Read More
I often play a little game with myself when I... Read More
You may have wondered why your mutual funds have been... Read More
The higher the market goes the more confusing are the... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
If you are a baby boomer, time is not on... Read More
Much like the middle child, mid-cap stocks have long struggled... Read More
Let's go into the details of why non-indexed mutual funds... Read More
After finding the price of a particular stock, usually the... Read More
There has been great condemnation recently because China has been... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
For weeks, no, months we have been bombarded with nothing... Read More
There are major differences between trading stocks and trading futures.... Read More
If you are going to be a winner in the... Read More
I don't know what kind it is, but I saw... Read More
A 'stock option' is a contract between two parties giving... Read More
house cleaning company Bannockburn ..I use the P/E ratio as a secondary indicator for... Read More
The big bad bear is stirring again. So far he... Read More
The Shadow knows. There used to be a radio program... Read More
Many people would like to diversify their portfolios to expand... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
Profitable day traders recognize that momentum trading is among the... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
We learnt the following the hard way! If any of... Read More
To begin, you might look at playing the stock market... Read More
Investing in long-term financial vehicles give you the most gains... Read More
This is a guide to the different types of mutual... Read More
04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More
If you're a normal human being, your need to feel... Read More
There is so much involved in developing peak performance, that... Read More
Over the past few months, several investment professionals have brought... Read More
If you are fed up with early redemption charges and... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
It seems that every day I turn on the TV... Read More
In a previously written article, we expanded the use of... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
Hedge current portfolio positions and gain access to capital resources... Read More
Exchange Traded Funds (ETFs) are a group of passive index... Read More
For years investors have been taught to look into the... Read More
We all know that emotions control every decision that an... Read More
One of the basic laws of physics is that a... Read More
Stocks & Mutual Fund |