| |
| |
|
|
Stocks and Mutual Funds |
|
Stuff
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
MORE RESOURCES:
Stocks-Mutual-Funds - Google News |
|
|
|
RELATED ARTICLES
The Great Stock Market Secret When the stock market is going up and all your stocks and mutual funds are making money you feel like a genius. It is too bad that some folks don't remember what happened in 2000. The Big Bad Bear The big bad bear is stirring again. So far he has stretched, yawned and peaked out of his cave. 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?This is the Buy N Hold strategy and, in case you haven't noticed, lost from 40% to 60% and more of investors' money from 2000 to 2003. Fortunately, for the past year stock markets around the world have gone up and folks have recovered about 25% to 30% from those low numbers. The Next Bull Market We are already in it, but you can't see it. It doesn't look like the one we had in '99. VooDoo Training For the Stock Market If you go to Haiti or other places in the Caribbean you may run into the Voodoo tradition of magic. There are long and mostly noisy rituals with the medicine man spouting words that bring great power and conjure up whatever it is the supplicant desires. A Stock Market Investment Strategy I feel that an investment strategy in the stock market can instill in the individual investor not only an assured confidence in all future stock market investments, but also an almost Zen-like sense of peace and well being. A stock market investment strategy spelled out, proven, and instilling within the investor the power to succeed in the stock market with an assured confidence. The Secret Method to Selecting a Winning Trading System Every successful trader has a winning system. There are of course, as many systems out there, as there are traders. 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. Risk Control Everything you invest in has risk so you want to do your research before you put your money on the line.For example, when McDonald's opens a new restaurant (please, don't call it a hamburger joint) they will investigate as many of the relevant facts as possible. Mid-Cap Stocks: Asset Class with an Identity Crisis Much like the middle child, mid-cap stocks have long struggled to find their identity. Carved out from the upper echelons of the small caps and the lower end of the large caps, the mid-cap sector has a rough definition of stock with a market capitalization of greater than $2 billion, but less than $10 billion. Understanding Stock Market Indexes A stock market index is a statistical measure of changes in the securities markets. An index represents a portfolio of securities traded on the market that is considered to be reasonably representative of the market as a whole. You Don't HAVE To Be Trading As a novice trader, you'll often feel the need to trade.You may be bored or frustrated. Inertia Syndrome When it comes to buying a stock or mutual fund most people act pretty quickly. There are some who will take the time to get a report from Morningstar (it is worthless) or get reports from their broker (also worthless) or even do a search on the Internet (if you know what you are doing). Hedge Funds You read and hear a lot about hedge funds. Unfortunately, most of what you hear is negative because it comes from the major media that has an interest in reporting negatives about them because the major media is supported by so-called standard mutual funds and brokerage companies that spend big bucks for advertising. Mr. Market 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. Long Term Investing In his wonderful book, 'Multiple Streams of Income', best selling author Robert Allen advises Investors to divide their Stock Market investment and trading capital into three portions -50% invested long term (forever) in an Index Fund, 30% invested in Accelerated Stock strategies and 20% in options or high risk investment strategies.This article will discuss long term investing and how technical analysis can alert us to points in time when it is prudent to take profits and exit the Stock market. Selection Vs Direction As I have said many times before in this column it really doesn't make any difference what you buy - stocks, funds or indexes - it takes smarts to know when to sell. Direction of the general market is more important than selection of any equity. How (NOT) to Buy Mutual Funds When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. Dollar Cost Averaging Dollar cost averaging is one of the most popular ideas in the investment community. Everyone seems to like it and it has become a watchword among stock and mutual fund brokers. Dont Buy Stocks based on P/E Ratio alone I use the P/E ratio as a secondary indicator for buying and selling stocks but I don't use the ratio in the same a manner as many value investors teach. I will explain the difference in my methodology for using the P/E ratio to your advantage.
|
||||||||||||||