Market Timing

Every broker and financial planner will tell you that you cannot time the stock market. I saw John Bogle, the great seer of Vanguard, on CNBC saying it can't be done. Of course, it is easy to understand why he and every other mutual fund manager would say that as they would have a problem managing huge inflows and outflows of money and he was buying and holding during the 18-year bull from 1982 to 2000.

Every successful hedge fund managers knows that Buy and Hold is death for capital investment. Hedge fund managers are different than regular mutual fund managers in that they only get paid when they make a profit for their investors. Wouldn't it be refreshing if we could have that happen for the mutual funds you own. Last year 90% of all stock mutual funds lost money and the average fund manager made about $300,000.

To be invested in a hedge fund you must be a "qualified investor". That means you need to show an income of $200,000 a year for the last 2 years and have a net worth of $1,000,000. It is the old story of the rich get richer. The reason is simple. They don't put money with money mangers who can't manage money. Hedge fund managers must make profits or starve. The Securities and Exchange Commission should allow this type of investment for small investors, but they don't. Why don't you write them a letter and ask 'why'?

To protect your cash in your IRA, 401K, SEP, trust or just plain stock account you can learn to use market timing. There is one very simple timing method that anyone can master and you don't have to be a mathematical genius or even the least bit market savvy to do it.

From 1950 to the year 2000 the Dow Jones Industrial Average gained 10,534 points. That is a pretty long time period so it is a very good sample. According to the Stock Trader's Almanac (2002 edition) a $10,000 investment using only the S&P500 Index your account would have increased by $11,408 if you had been invested just during May through October. Pretty shabby. However, if you were invested only from November through April that same $10,000 would have gained $314,056. Cowabunga! Who says you can't time the market?

If you were invested in a broad market index fund of any kind and switched to a money market during the Spring and Summer periods and been fully invested during the Fall and Winter you could be one of those qualified investors. You could have made an extra 700%. That's real money. And there are better timing models.

Anyone can do this, but brokers tell you you have to be fully invested all the time. Nonsense. They are worried you might take your money out. Cash is a position. They will tell you it is too simplistic, but that is the beauty of it. Simple is always better.

This is the easiest of all timing models I know and it works. Take some time to study it. It can only increase your net worth. And you will sleep better.

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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