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
home cleaning services Deerfield ..People are constantly asking me why is the stock market... Read More
Let's go into the details of why non-indexed mutual funds... Read More
A few years back ? it seems like an eternity... Read More
If it walks like a duck, quacks like a duck... Read More
With the internet such a huge part of our daily... Read More
Many people would like to diversify their portfolios to expand... Read More
This article describes the model of a natural relationship between... Read More
Two weeks ago I wrote about what the Securities and... Read More
Let's say you are interested in this one company. You... Read More
Investors who exclusively use broadly diversified, no load mutual funds... Read More
If you go to Haiti or other places in the... Read More
You'd have had to be living on a desert island... Read More
Do you have a nest egg? You know, a place... Read More
Investing in long-term financial vehicles give you the most gains... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
How many times has this happened to you? You're at... Read More
Exchange Traded Funds (ETFs) are a group of passive index... Read More
The stock market is very unstable at this time going... Read More
Over the past few months, several investment professionals have brought... Read More
Have you been listening to the talking heads on CNBC-TV?... Read More
Unfortunately, most of you who are reading my column are... Read More
The Surgeon General of the United States says that smoking... Read More
Sometimes the best way of lowering exposure to risk is... Read More
Are you one of those many people who dread reading... Read More
Mutual funds and brokers are always preaching not to buy... Read More
recurring housekeeping Highland Park ..A 'stock option' is a contract between two parties giving... Read More
There are red lights, green lights, blue lights and spot... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
Now where have I heard that before? I know. It... Read More
On Friday or Saturday evening my wife gets a movie... Read More
To become a successful trader you must have some kind... Read More
Before you buy another car you walk around the lot,... Read More
Financial markets provide their participants with the most favorable conditions... Read More
You have heard about a particular mutual fund from a... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More
Spread trading is a technique that can be used to... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
For years I have been saying you must have a... Read More
This is a rather simple strategy with which I am... Read More
People are always asking me when should I sell my... Read More
Just 30 years ago the stock market was a shadow... Read More
Being wrong is OK, but let's not carry it to... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
At some time in your life you have been on... Read More
We learnt the following the hard way! If any of... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
Stocks & Mutual Fund |