I constantly hear the talking heads on CNBC-TV, the radio and other places talking about THE market. Of course, they mean the stock market which actually now is world wide and no longer just concentrated in New York. To every New Yorker New York is the center of the world from which radiates all knowledge and everything else worthwhile.
The stock market is thousands of companies world wide. Those that have been listed with the New York Stock Exchange must meet strict requirements as to the capitalization of the company and the price of their stock as well as its ability to be traded so there must be many thousands of shares and large numbers of shareholders.
The trick, and I call it that even though it isn't, is to be able to tell when it is in an up trend and when it is going down. If you knew this you could not only make a lot of money but could keep from giving back profits when you have them. When the market is going up you want to own stocks and mutual funds because 60% of a move in stocks is due to the general direction of the overall market.
When I first invested I made and lost like everyone else until I learned to listen to the voice of Mr. Market. Because we are so overwhelmed with useless data from brokers, newspapers, magazines, TV, friends and other nefarious sources we haven't taken the time to learn the language of the market. And it isn't that complicated. Mr. Market will tell you all you need to know.
Most of us don't have time to be pouring over the financial news every day because we have a life that requires our attention, but if you are willing to give about 15 minutes each week you can learn the language of Mr. Market. Day trading language is not where it's at; however, the long term language is very easy. You simply plot a 200-day moving average of the S&P500 Index and when the index price is above the 200-DMA you buy and when it is below you sell and put your money in a money market fund.
Now I know that seems too simple, but it isn't. You can easily check it out with a historical study on many Internet web sites. I use www.bigcharts.com by clicking on the red Interactive box and then following the instructions in the left hand column. With this simple method you will always be on the right side of the market.
The mutual funds in this simple plan only need to be checked once each week and sometimes only monthly. If you have a 401K you should be able to transfer to a money market fund when a sell signal is given with no commission charges. It will be a rare occasion if you do this twice a year.
This not a get-rich-quick scheme. It will allow you to keep most of the profits you have made during a bull market and protect your funds during a bear phase.
Al Thomas
Author of "If It Doesn't Go Up, Don't Buy It!"
Never lose money in the stock market again.
http://www.mutualfundmagic.com
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