I continually hear from economists, talking heads, other market letter writers, analysts and assorted "experts" that I need to know all kinds of "stuff" about the stocks and mutual funds I am going to buy and I should keep up with them on a regular basis.
What is this important "stuff"?
Let's see. Oh, I know. Price to Earning ratio, P/E. That's always a big one on almost everyone's list. Simply put it is how many years it will take a company's earning to pay back the price today. It can be from five to infinity if it is not earning anything. Today there are many companies that have P/Es in excess of 50. That's 50 years to earn back your investment. Kinda steep, don't you think? For years the average has been 14 or 15. Today it is about 28 to 30 depending on who is counting.
A stock selling at 14 P/E is fairly valued by "experts", but if the stock is going down is that still a "fair" value? Do you want to buy something that is a fair value, but looks like it will sell for less in a few months?
Then there are all kinds of things market analysts like to look for and talk about such a gross sales, net profit, management experience, competition, industry sector, price/volume relationship, interest rates, rate of inflation and I could go on for a couple of pages, but you get the idea. When, and if, you do this type of analysis you will find most of the numbers don't agree with each other to give you a clear idea of whether to buy or sell. It is like trying to pick a button out of a washing machine during wash cycle. The more you look the more confused you become.
Brokerage companies want you to try to use all this "stuff". They encourage you to become confused. That way if you pick a stock that goes down they don't take any blame. "The market is very complex" is their favorite phrase. Whether you win or lose they make money in commissions.
If this "stuff" is of no value in stock selection (and it isn't) then how are you to find stocks that go up? It is so simple that brokers don't want you to know. In fact, most of them don't know. Here is the answer. Find a stock or better yet a mutual fund that is going up. Is that too easy?
There is a basic law of physics that says a body in motion will remain in motion in the same direction until disturbed by another force. The Law of Inertia. This same principle can be applied to the stock market.
Find a stock or mutual fund that is going up and buy it. When the direction changes to down (or even sideways) sell.
You don't need all that "stuff".
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
car service from Midway Burlington .. Lockport Chicago limo O’Hare"If you don't know where you are going, any road... Read More
We keep hearing about this bear market and that the... Read More
Suppose your position has made a big move and you... Read More
There are red lights, green lights, blue lights and spot... Read More
On November 17 I bought 7 different mutual funds and... Read More
Much like the middle child, mid-cap stocks have long struggled... Read More
You probably have been told that options are risky. Even... Read More
The stock market can present you with a lot of... Read More
Quick, look out the window. It's raining. No, the sun's... Read More
The stock market is very unstable at this time going... Read More
It is commonly reported that the stock market averages about... Read More
Do you have a financial planner? Does one of your... Read More
The trading method you employ to approach the stock market... Read More
If you are serious about making and keeping money by... Read More
With the internet such a huge part of our daily... Read More
An investor can find and research the best stock on... Read More
What the heck am I talking about?It is often said... Read More
Every Wall Street analyst, financial planner and broker will tell... Read More
Success in small cap & micro cap stock trading like... Read More
I love roller coasters. The steeper the better. High and... Read More
There is no question that the stock market is being... Read More
How many times have you said to yourself, "I'd like... Read More
In a previously written article, we expanded the use of... Read More
Even if you don't own any of their stock or... Read More
One Saturday morning, while he was sitting at his computer... Read More
Granger limo Chicago ..One of the greatest challenges of investing in stocks is... Read More
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
After finding the price of a particular stock, usually the... Read More
All of the talking heads have been telling us that... Read More
If you've ever flipped on the television to CNN Financial... Read More
Today we are inundated with tons of information about the... Read More
Whenever I see mutual fund comparisons in the trade publications... Read More
There are many important things you need to know to... Read More
Ever notice how behavior in one area of life can... Read More
The trading method you employ to approach the stock market... Read More
A colleague of mine just returned from a scuba diving... Read More
In 1960 an engineer working for a watch company in... Read More
There are formulas for just about everything, but it has... Read More
An insane person cannot evaluate an insane evaluation system.As you... Read More
In today's volatile and confusing stock markets everyone is searching... Read More
If you haven't heard of the technical indicator with the... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
"Buy and hold" is one of the most heralded investment... Read More
Look back over the years and try to remember how... Read More
Who are the successful investors?There are those who follow the... Read More
Mutual funds are doing more and more to discourage investors... Read More
Picture one of those clubs where only the real heavyweights... Read More
I use the P/E ratio as a secondary indicator for... Read More
Most advisors will tell you they can beat the market.... Read More
I have a 2-car garage. There are nice shelves on... Read More
Stocks & Mutual Fund |