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
professional maid services Deerfield ..Congress recently passed another new law that is supposed to... Read More
As an investor you will want to check out any... Read More
It depends on your level of understanding of the market... Read More
I receive emails from Morningstar. This company provides statistics and... Read More
A few years back ? it seems like an eternity... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
For years investors have been taught to look into the... Read More
First let's see what protectionism is. According to Mr. Webster... Read More
If you have not back tested your trading system, you... Read More
Several times each month I am solicited by various market... Read More
As I said in Part I everyone in the insane... Read More
One of the basic laws of physics is that a... Read More
This is the continuing story of our two imaginary traders,... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
Someday you may want to retire and continue to live... Read More
I know there are a lot of you out there... Read More
Well maybe that's overstating it a little, but it's certainly... Read More
If you are fed up with early redemption charges and... Read More
Sometimes the best way of lowering exposure to risk is... Read More
Are you attracted to the idea of being in control... Read More
Has your broker been calling you recently with the "great... Read More
A recent cartoon in my daily newspaper showed two guys... Read More
This is an extract of an article which was first... Read More
Carefully thinking through your goal as a trader is of... Read More
quick home cleaning Lake Forest ..In a previously written article, we expanded the use of... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
Congress recently passed another new law that is supposed to... Read More
The big bad bear is stirring again. So far he... Read More
This article describes the model of a natural relationship between... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
A common problem I often see when working with living... Read More
If you've ever flipped on the television to CNN Financial... Read More
How is it possible that trash Companies are posting less... Read More
Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More
One Saturday morning, while he was sitting at his computer... Read More
There are many good penny stock investments available, which could... Read More
Mutual funds were created with the idea that one person... Read More
"If you don't know where you are going, any road... Read More
Are hedge funds a suitable investment for you? Hedge funds... Read More
It seems that every day I turn on the TV... Read More
When you stand on the ocean shore and watch the... Read More
We need a rabbit!This was a pretty horrible week for... Read More
Just about now everyone is confused as to which way... Read More
One of the great "secrets" of successful people is discipline... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
Did you know you can make money (and a lot... Read More
As I said in Part I everyone in the insane... Read More
If you have talked to a stock broker or financial... Read More
Stocks & Mutual Fund |