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Four blind men were asked to give a description of an elephant. They had not seen one or ever encountered such a beast.
One grabbed hold of its tail. Another put his arms around a leg. The third gripped its trunk and the fourth walked into the side. The description given by each one was correct and accurate except it did not describe the elephant's true form. Each man was right and each man was wrong.
We now have some equally blind men trying to describe what is happening in our economy and the stock market - economists, brokers, bankers and financial planners.
The economists say that because of the interest rate cuts by the Federal Reserve and the huge inflow of cash that the economy will recover in a short time. The bankers opine that all that money that the banks are allowed to loan is not being given to their old customers and they definitely don't want to make new loans to new and unknown companies. The brokers say you are in for the long haul and don't worry the market always comes back. The financial planners have a new plan to diversify your holdings by shifting your money around to take advantage of this current market.
They are all right and they are all wrong. You cannot explain the overall economy with a single solution. We have a complex mix with new ingredients coming to our awareness each day.
To get a better look at this elephant you must stand back not only in distance but in time as well. Ask this question: Where is the country now economically in comparison to September 10 before the terrorist attack? At that time the stock market was going down and we were in a recession. Then the market crashed and the recession was officially declared. The stock market has climbed back up to where it was September 10 and the economists are telling us that the recession may be over.
However, when I look at this elephant it still looks like the same elephant. The basic portions of the economy are still slow and slowing. Unemployment is rising. The banks are not loaning money even though they have it. Venture capitalists are not putting money in new companies. Manufacturing capacity has not come back. We have weaker housing because of higher interest rates and the consumer is spending like he used to. Deflation has reared its ugly head. Most of the new spending has been on counter terrorism that is not productive and taxes have not been reduced so the consumer can have more spendable cash. And a lot more.
The stock market rally has been in anticipation of greater corporate profits that could be a long way off.
Now is the time to be wary of whom you listen to before you invest or make any changes in your investments. The elephant being described to you may not look like that at all.
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.
Hedge current portfolio positions and gain access to capital resources through loans against free trading, aged affiliate or aged non-affiliate securities. Make proper use of your assets while waiting for performance and hedge your position should the asset move against you.
The Value of Stocks of a Company
The debate rages all over Eastern and Central Europe, in countries in transition as well as in Western Europe. It raged in Britain during the 80s: Is privatization really the robbery in disguise of state assets by a select few, cronies of the political regime? Margaret Thatcher was accuse of it - and so was the Agency of Transformation in the Republic of Macedonia. At what price should the companies owned by the State have been sold? This question is not as simple and straight forward as it sounds.
Option Spread Trading
Spread trading is a technique that can be used to profit in bullish, neutral or bearish conditions. It basically functions to limit risk at the cost of limiting profit as well.
Boiler Room 7/17/00
On Friday or Saturday evening my wife gets a movie from Block Buster and after dinner we sit, hold hands and watch. This week she brought back one that I think every investor or anyone contemplating investing in the market should see. It is called "Boiler Room".
How to Pick Winning Stocks
There is nothing more exciting than finding an undervalued stock and seeing it explode out of nowhere rising in value 100% or more in a few weeks. Some stocks can move as much as 1000% in a year and?. Even after the stock market crashed in 2000, some stocks still have gone up 500% or more in a year.
Because there are so many stocks that are NOT paying dividends and also going down people are looking for a safe investment that will pay a decent return and also won't lose money. Slowly folks are beginning to think about bonds of which there are all kinds.
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. The pleasure part is great, but I am not sure if he awakes without a hangover.
10 Tips For Creating Wealth From the Stock Market
1. Do not spread your money too thin.
The spring-loaded rat catcher is the ultimate low-tech device invented more than 100 years ago and remains the best demouser in the world. It is so simple anyone can master it and best of all you can keep on using it year in and year out. It always works.
My Stock - Right or Wrong
We all know the expression, "My country, right or wrong", but have you ever thought about the stocks or mutual fund you own and said to yourself, "My stock - right or wrong" and held on to your position even as you saw your hard-earned money disappearing?
Who are the successful investors?
Trading vs Investing
I often hear from people, "I don't trade. I invest. I buy a mutual fund and I hold it". Mr. Investor, did you know you are trading on a regular basis? Are you aware that mutual fund managers are changing their positions by selling certain stocks and buying others?
Forces that Move Stock Prices
Among the largest forces that affect stock prices are inflation, interest rates, bonds, commodities and currencies. At times the stock market suddenly reverses itself followed typically by published explanations phrased to suggest that the writer's keen observation allowed him to predict the market turn. Such circumstances leave investors somewhat awed and amazed at the infinite amount of continuing factual input and infallible interpretation needed to avoid going against the market. While there are continuing sources of input that one needs in order to invest successfully in the stock market, they are finite. If you contact me at my web site, I'll be glad to share some with you. What is more important though is to have a robust model for interpreting any new information that comes along. The model should take into account human nature, as well as, major market forces. The following is a personal working cyclical model that is neither perfect nor comprehensive. It is simply a lens through which sector rotation, industry behavior and changing market sentiment can be viewed.
Is The Bear In The Cage?
For the last few weeks we have seen the stock market averages going higher and higher each week yet the economic news is still very bad. Is this bear market coming to an end? Will the stock prices and mutual funds go back up to where they were?
I Love You, Warren Buffet
Sometime around 1980, can't remember exactly, there was a flight of money from many countries to Switzerland. The clock makers had so much money pouring in that the banks took interest rates to zero and even for a period of time were actually making you pay ½% interest to them to put your money in their banks. Yes, it actually happened because people believed their money was going to be safe there. It was.
Living Trust Investing: Income Considerations when the Grantor Dies
A common problem I often see when working with living trust beneficiaries and trustees is the lack of attention in rethinking income strategies in the event of the grantor's death.
Why Change Funds?
On November 17 I bought 7 different mutual funds and went to a 100% invested position. One of the funds I bought was Robertson Stevens Information Age (RSIFX) and it has made money as have the other six.
A Common Misconception about Stock Prices
I cringe every time I hear a novice investor tell me that they only purchase low priced stocks because they offer higher potential gains. A common phase I hear is "I like to buy $1 and $2 stocks because they can double easily and I will make a 100% profit".
No Load Mutual Funds: Boost Your Portfolios Returns
Investors who exclusively use broadly diversified, no load mutual funds for their stock investments often lose out on opportunities to increase the reward potential of their portfolios. This article looks at two methods investors may use to enhance the performance of their portfolio of diversifed, no load mutual funds.
Buying Mutual Funds
It looks like the market is ready to start up again so it is time to buy mutual funds, but you only want to invest your money in funds that go up. First, you don't want to start with a loss so be sure to purchase no-load mutual funds. There is no need to ever pay commissions as there are several thousand funds that have no commission whatsoever for either buying or selling.
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