One of the basic laws of physics states that a body in motion will continue in motion in the direction it is going until interrupted by another force.
That basic physics law also applies to stocks and mutual funds. To see this trend it will be very apparent in a weekly or monthly chart rather than a daily chart. The daily chart shows too much noise (random movement).
In the Friday edition of Investor's Business Daily you will find 37 weekly charts on the back page of Section 2. One of the common occurrences among these issues is the steady upward progression of price, many with an angle of 30 degrees or more. The up movement of price may have been going on for many months. This is the kind of stock you want to own and even add to your position as it continues upward.
Most brokers talk about dollar cost averaging and mean adding to a stock as it goes down. That is stupid. There is only one right way to dollar cost average and that is when it is going up - NEVER down. Averaging down will put you in the poor house.
Today's stock market (end of 1999) we see the upward momentum of almost all the major stock averages - the DOW Jones Industrials, the S&P500, the Russell 2000 and many more. Some of these indexes are headed for the stratosphere. No, I have no idea how high or how far is up, but remain 100% invested to take advantage of this runaway bull. The market will tell me when to sell.
For anyone holding individual stocks about the only thing you can do is set a trailing stop-loss order so that when the issue turns you will be out with a nice profit. Don't try to predict the top because you will sell too soon. Let the stock itself tell you when to get out. The amount of the stop will be up to you, but I like about 10% of Friday's closing price. Never move the stop down.
There are people who buy mutual funds and put them away and never look to see how they are doing. This is a mistake. You are hurting your financial future if you do not regularly review your funds. Monthly is best, never less that quarterly. Momentum applies here too and even more so because many funds have a bias to a particular sector of the market. There are big caps, small caps, regional, international, value, etc., etc., etc. A policy to enhance your income is to see which sectors or groups are doing best and be invested in a fund that is heavily in that sector.
Mutual funds of a certain sector will run up for months at a time, even years, but when that sector becomes weak you should sell immediately and buy a stronger one. If you are with a discount broker there will be no commission to switch and, of course, you only buy no-load funds. Never blindly buy and hold any fund.
As you become aware of the momentum of various sectors and switch to stay with the strongest you can easily double your current return.
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
affordable house cleaning Wilmette ..The demand for world oil is increasing while world reserves... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
Since I can remember, and that's a long time ago,... Read More
Disclaimer: Please note that I do not necessarily purchase, own,... Read More
Mutual funds were created with the idea that one person... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
Two weeks ago I wrote about what the Securities and... Read More
Last time we looked at the real performance of the... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
Are you one of those many people who dread reading... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
IT'S REMINISCENT OF THE OLD children's tale about an old... Read More
What is the Series 7 Exam? If you... Read More
In 1960 an engineer working for a watch company in... Read More
The gleam and bright lights of Wall Street lure in... Read More
Now where have I heard that before? I know. It... Read More
I continually hear from economists, talking heads, other market letter... Read More
Recently I was invited to appear on a live CNNfn... Read More
This is a rather simple strategy with which I am... Read More
With all the bad news that has been dumped upon... Read More
Peter is a professional trader, Paul is not. Peter has... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
A common problem I often see when working with living... Read More
I love roller coasters. The steeper the better. High and... Read More
If you're like many investors who squander those small dividend... Read More
quick home cleaning Northbrook ..I know there are a lot of you out there... Read More
If you were to find that you had some severe... Read More
Four blind men were asked to give a description of... Read More
A Guide to Using Stop Loss Orders Stop losses are... Read More
It is difficult to make money in a bull market,... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
Mutual fund investing is a lot like Thai cooking. Everyone... Read More
Its dinnertime and the phone rings. It's Joe Noname with... Read More
Every day I see in the financial section of newspapers... Read More
People are constantly asking me why is the stock market... Read More
Having lived aboard a sailboat for 2 years I was... Read More
Mutual funds are doing more and more to discourage investors... Read More
To become a successful trader you must have some kind... Read More
What a great statement!I just heard someone use it in... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
If you are a baby boomer, time is not on... Read More
Do you have a financial planner? Does one of your... Read More
Profitable day traders recognize that momentum trading is among the... Read More
In today's volatile and confusing stock markets everyone is searching... Read More
Inverted interest rates? What's that? Who cares? Even if you... Read More
Spread trading is a technique that can be used to... Read More
If you don't know where you are going any road... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
It is commonly reported that the stock market averages about... Read More
As a novice trader, you'll often feel the need to... Read More
Stocks & Mutual Fund |