| |
| |
|
|
Stocks & Mutual Funds Information |
|
|
|
The Cub; II
We keep hearing about this bear market and that the bottom is "in" or "very close" so we should be invested in these bargain basement prices to take advantage of the next bull so we won't lose out on the expected huge profits. This is not a big bear market - yet. What you are experiencing is the cub phase. The full size bear has not appeared. It is going to be one of the biggest, meanest, ugliest Kodiaks the stock market has ever experienced. If you think you have lost money in the last 2 ½ years wait a while as this cub is eating everything in sight as he grows larger each day. If you haven't thrown your paper down because you think I'm nuts let's try on these facts that the talking heads don't want to discuss. So far the U.S. is better off than many countries, but the economy is slowing down every day and more and more folks are being laid off. As the American consumer slows his buying that cuts into retail sales which cuts into wholesale sales and then the manufacturer must slow his production so he must lay off workers. The slow down and layoffs at the factory affect at least 6 local businesses who either lay off some of their people or are forced out of business. As businesses slow and their sales and profits diminish it becomes apparent in their stock price so it goes down. Most stocks are priced to valuations based on company earnings called the P/E ratio, price divided by earnings per share. When you look back upon the P/E ratios for the past 100 years there has a mean (similar to an average) of about 14. Currently the P/E ratio for the stock market is about 31. In order for the mean to be realized you have two ways to achieve it. Either the earnings of companies must double or the price must decline by 50% - from here. When you have a worldwide slowdown the chance of doubling profits is pretty slim so the market does its thing by decreasing price per share. That is called a bear market. When you think about business slowing more from here you also come to understand that it will take some kind of miracle to get profits up. In fact earnings will continue to decline so the reduction in the P/E ratio is a long way off. The more the stock market goes down the longer it will take to get to a "normal" P/E. It kind of feeds on itself. If you own any stocks or mutual funds you can realize it is time to sell even at these low prices because the market is going to go lower. One of the keys to being successful in the stock market is to sell with a small loss and not wait for it to get bigger. Unfortunately, the small investor always wants to wait for a rally to get out "even". There is no "even" in this market. The smartest action is to sell before your account approaches zero. The cub is hungry. Don't wait for him to become a full-fledged bear. (c) 2005 Al Thomas' best selling 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 to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.
MORE RESOURCES:
Stocks-Mutual-Funds - Google News |
|
|
|
RELATED ARTICLES
Emotional Involvement I'll bet with almost anyone that has stocks or mutual funds in his portfolio that he has losers, but he won't sell them because he "likes them" or some similar excuse. This is the philosophy of a loser. When Should I Sell? People are always asking me when should I sell my stock or mutual funds?There are some relatively easy answers to this. In fact, so simple that you won't believe them, but they are things I have learned over the past 30 years as a professional trader on the floor of the commodity exchange in Chicago. Is Active Trading The Answer? One of the main reasons many of us get into investing is to become financially independent. Who isn't trying to amass a portfolio with enough income to ensure that we don't have to work when we should be playing golf or traveling the world. How Much Information Do You Need? You have decided to buy some stock or mutual funds, but wonder which one to buy. You need more information so you call your broker for advice. Market Psychology Today we are inundated with tons of information about the economy, stocks, government agencies and foreign governments. They show us charts and graphs of the increase/decrease in oil production over the last 5 years, the amount of maple syrup produced in Vermont for the past century, the time it takes to bounce a signal off the moon and all kinds of other nonsense that we can live without. What the SEC Really Thinks About Mutual Funds! Let's go into the details of why non-indexed mutual funds are such a bad deal. When Arthur Levitt became the head of the Security Exchange Commission in 1993 he had to sell off all of his individual stocks so that people would not claim that he was doing any dirty inside dealing. Planning Your Dive and Diving Your Plan - Trading! A colleague of mine just returned from a scuba diving trip in Cozumel, which just happens to be one of my favorite places to dive. Anyway, she was telling me about an unexpected difficulty she encountered while swimming around the corral reef down about 85 feet. Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market In a previously written article, we expanded the use of the term "Trading Baskets" to include stocks from different sectors or industries. Now I want to share with you an approach to day trading or swing trading that I had some success with back in the wild and woolly, pinnacle days of day trading that may still work today. Catnip of the Stock Market 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. Trading Tips No 2: The Big Lie in the Stock Market It is commonly reported that the stock market averages about 10% per year return over the long term (decades). So the investor that buys and holds a diversified portfolio of stocks or mutual funds is led to believe that their portfolio will grow by 10% per year on average. High Price/Earnings Ratios and the Stock Market: a Personal Odyssey After some forty years of banking and investments, I retired in 2001. But since I do not golf, I soon found retirement to be very boring. Starbucks Stock is Up Starbucks earnings are up again and so is their stock slightly. It appears they are exporting America's weakness to caffeine and sugar around the world. Adding Funds Someday you may want to retire and continue to live in the life style to which you have become accustomed. According to conventional wisdom you will need less money because you will have fewer expenses than when you had to go to the office every day. Two for the Money Look back over the years and try to remember how many different stocks and mutual funds you have owned. Suppose you had owned only 2 different equities during that entire time. Trading Education: The Best of Both Worlds! I made my very first investment in the stock market when I was ten years old. Ever since then I have been hooked! Now I check out hundreds of trades each year with the same excitement andenthusiasm, and each time try to find that one market at the right time that could dramatically create wealth. DIY Portfolio Management Exchange Traded Funds (ETFs) are growing. Investors are choosing low annual expense and market return over high annual expense and promised performance. Investing in Stocks and The Game of Monopoly To begin, you might look at playing the stock market as though you were playing a game of Monopoly. That's right; for playing the stock market 'game' is not unlike playing a game of Monopoly. Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others When it comes to stock market trading it PAYS to have more knowledge than the rest of the pack. Pure gold can be harvested in each profitable trade that you accomplish. Exchange Traded Funds Primer Exchange Traded Funds (ETFs) are a group of passive index funds that trade on an exchange like an individual stock. At the time of writing there are 162 ETFs with $220 billion in assets under management trading on U. Dont Lose All Your Money That sounds like good advice doesn't it? Don't lose all your money.After all what is an investor without funds in the brokerage account? Hint: BROKE!On the subject of investing, this means getting out of a trade when it goes against you.
|
| home | site map |
| © 2006 |