Never lose money in the stock market again. Yeah, I know. Don’t buy any stock, but that is not what I meant. There is a clear and easy way to protect your capital – what you have now and what you might decide to buy in the future. And don’t count on your broker to tell you this.

As you are aware we have been in a bear market since the beginning of 2000. That is a long time and if you have held your stocks and mutual funds for all this time you have some pretty terrible losses. Losses you did not have to take if you had a knowledgeable broker or financial planner. Financial planners don’t know any more than brokers so you can’t count on them to save your money from being flushed along with everyone else. It is a shame that brokers and planners are not taught how to protect your capital.

When a broker is hired he is given 2 manuals to study. One is on SEC (Securities and Exchange) regulations so he will not break any rules so his company will not be fined for misconduct. The other is on how to open new accounts - how to get you to send money. There is no training on how to trade – buy low and sell high. His training manual consists on how to do “research”. Research is knowing all about a company to determine if it is well run and they are making money or have the ability to make money some time in the near future.

You can obtain complete reports of everything you want to know and even more from Morningstar. They will bury you in information. This kind of “research” is worthless. Why? Because if you can find it out then everyone in the world knows it and it is reflected in the current price. The one thing you want to know is if you buy it will it go up.

The average broker has about 300 accounts and unless you have lots of money he will not pay much attention to you. As new brokers get a large number of accounts they give away the small accounts (those with less than $50,000) to the new, less experienced brokers so they can concentrate on the big boys with big bucks.

That is why you, and only you, must learn how to protect your investments. In a bear market the one who loses the least is the winner and the way to do it is with Stop Loss Orders. If you bought a stock or mutual fund you must immediately decide how much you will risk if it should go down instead of up. Usually 10% is a good rule of thumb. If you paid $40 per share you should sell it immediately of it goes down below $36. Don’t ask your broker because he has been taught to Buy and Hold and that philosophy will break you. As your stock goes up you must raise your stop (never lower it) so it trails 10% behind the closing price posted very Friday in the newspaper. There are literally hundreds of thousands of people today who wish they had done this during the past 2 years.

If you were one of them it is not too late to start now so your retirement account will be there when you need it.

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

During our travel down life’s path we come to many places where the trail divides and we must make a decision. Some involve psychological (emotional) choices – marriage, divorce, leaving home, career changes, etc. Others are monetary – buying a new car, home, starting your own business, investing, etc. Many are interwoven having aspects of both psychological and monetary.

The marriage decision means you have decided to live and share everything with a partner and also support that partner in every way including financial.

Investing in anything is at first mostly financial, but as you accumulate a larger and larger amount it begins to have a grip on your emotions. Greed and fear are the two great motivators in the investment community. Everyone wants to buy that $1.00 stock that goes up to $200 per share. Unfortunately, for most, the pot of gold remains at the end of the rainbow. As the years pass by and your investments become larger and larger fear of loss creeps into the subconscious. No one wants to lose.

During the past 3 years we have seen many people lose a great deal of their stock market investments. Both fear and greed have taken their toll. Wall Street has not taught you how to prevent loss and they never will. Until you have experienced losses you go along with the program and too late you realize there must be a better way, another path. Once you have found it you now have the decision to break away from old conventional wisdom. You realize that you have been following the wrong path.

Wall Street’s maxims of Buy and Hold, Do Research and Dollar Cost Average have been and still are false. Once you have come to this understanding you will be on the road to successful investing. You will have taken the right turn on the path.

Losing money is not only a financial hardship but also a psychological burden. No one likes to be wrong, but hear this bit of advice about the stock market. It is OK to lose a small amount, but never OK to lose a large amount. Protection of your capital is of prime importance.

Whenever you buy a stock or mutual fund your first consideration should be how much am I willing to lose if it goes down instead of up? You can set that parameter at 5% to 20% of your investment. For stocks you can have the broker put in a permanent stop loss order, but for mutual funds you must set the price and make the call to tell the broker to sell you out. You are on the right path because you are in control. If you do sell with a 10% loss remember you now have 90% of your money remaining so you can find a more profitable vehicle. Ask around to find out how many of your friends now wish they had had one of those stop orders in place during the past 3 years.

The secret pathway to success in the stock market is selling, not buying.

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

Well, not really. What I mean is I don’t mind losing a small amount when I have to sell a stock or mutual fund that is going down or taking away the profit I have made. During this past 3 years I have made money each year because I was not afraid to sell. The great secret that Wall Street does not want investors to know is all about selling, not buying.

The recent headlines scream”10 Stocks To Buy Now”, “100 Best Mutual Funds For 2003”, “Make 25% With These Safe Stocks” and “Now Is The Time To Buy”. All are either stupidity or wishful thinking. Brokers and financial planners don’t want you to find out that they don’t know either so they come up with great stories about the equities they recommend. Unfortunately, when the stock or fund heads down it becomes one of those buy and hold situations and they tell you that you are “in for the long haul” and “the market always comes back”. I hope that by now you have learned this is not true.

When there is a secular bear market, as I believe we are in now, it could be many years before we get back to “even”. Last year 96% of all stock equity mutual funds lost money and the average fund lost 21%. These are times when the only safe place for money is in cash – a money market account. For the previous 3 years money in your mattress outperformed the stock market by 40% and for lots of folks much more. Here is one your broker will not tell you – Cash Is A Position.

The first thing you must learn about investing is how to protect yourself from losses. I mean big losses. When I was a floor trader on the exchange I lost on about 40% of my trades, but I never lost much. I came to love those little losses because I still had almost all my money available to find a better position. One that would make money.

Almost all of the magazine writers, talking heads and brokerage analysts are professional losers. It is easy to prove because they never tell you where to sell what they are telling you to buy. If you don’t go in with a plan to protect your money it is like a general who goes into battle with no plan for retreat should he find he couldn’t win the battle. One of the simplest money savers is the 10% stop. It you buy a stock or no-load mutual fund you should not take more than a 10% loss. This will leave you with 90% of your money that could find a real winner. The small losses will never break you. It is sitting with a loss that gets bigger and bigger and bigger is the one that will ruin you.

Learning to love the little losses will make you rich.

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

If you have a pension plan at work you will want to read this and if you don’t you will still want to because it affects your retirement account.

There are two kinds of formal retirement plans that are set in place by employers. The least complicated is the Defined Contribution where you are allowed to make your own contribution and your employer may also make matching contributions of a percentage of what you put in. At retirement you get out what you put in plus all accruals. The more you contribute the more you have for retirement. A professional money manager who tries to get the most return for the amount in the pool manages the money. He is paid an amount usually a percentage of the assets in the pool, not on performance.

Sometimes a large mutual fund such as Fidelity or Janus is the manager and you are allowed to choose from 6 or 8 different mutual funds in which to place your cash. They do not encourage you to switch from fund to fund even if a fund you are in is under performing.

The Defined Benefit pension plan is much better for the employee. It states the amount you will receive monthly upon retirement. Your contribution amount is fixed and the company makes up the difference to be sure that there is enough money in your account so you will be paid the amount specified. The pension manager must use an actuarial table to figure how much money is necessary to be placed in the pool each year.

Recently it has been found that many companies have been using unreal rate-of-return figures for projection of profits. What the company is allowed to do under current law is to add any overage of calculation to their bottom line. Now it seems that those numbers have been far off so instead of your company showing a big profit last year they will be showing a loss. Suppose your manager had figured the plan would grow at 10% and now it has only grown at 5%. This could have disasterous affect on your company’s bottom line and certainly on your company’s stock prices.

You might want to ask your company Controller or Treasurer for a report on how your pension plan is doing including what assumption they are making for return on investment.

In a long-term bull market mutual funds do well, but in a long-term bear market mutual funds will lose money. No one talks about this, especially the mutual funds, but it is an obvious fact when you step back to look at the overall market performance for the past 75 years.

During a bear market there are only two types of accounts you can have within a 401K or other retirement account to protect yourself from loss – either a money market account or a fixed income bond mutual fund. Better check it out.

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.

1-888-345-7870; al@mutualfundstrategy.com

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.

Not diversification for the sake of it, but diversification to help us sleep at night and enhance our long term returns.

Multiple Streams of Income was written in the year 2000 - the 18 year Bull market had made millionaires of anyone who bet the farm on Stocks rising forever - but investors needed an exit strategy of some sort in case the trend didn’t continue, and too many of them didn’t have one.

Now many are paying the price.

For years, buy and hold was a no brainer - just buy the dips and the Stock market made you rich - until it all came to a sudden end in the year 2000.

So, what do Investors, as opposed to traders, use as an exit strategy?

The weekly chart below is the S&P 500 with two moving averages, 20 weeks and 40 weeks. Charts available at StockTradingReview.com

An excellent strategy that some of Peter’s friends use is to hold this Index when it’s going up, and to exit or hedge your position on a moving average crossover on the weekly chart to conserve profits when it starts going down.

After all, if it’s not rising in value, why own it?

Long term wealth creation demands that we prudently invest in assets that are rising in price, despite short term corrections against the major trend.

These two moving averages give a graphic display of the major trend. When the trend is up, they stay long - when it’s down, they stay out, hedge their positions or go short - simple.

By placing these two moving averages on this chart, it allows even someone the age of Peter’s daughter to tell him the direction the market is taking.

It protects capital that would otherwise be invested in this Index for investment in other areas, because it avoids being in this market through the downtrends.

Of course, the Index Fund managers hate people who switch from fund to fund or to cash when the trend changes.

They want investors to stay invested forever - management fees and trailing commissions may have something to do with this…

Many traders regularly receive a publication from one of the big Index Fund managers and they are always advising him that it’s time in the market, not timing the market that is important - if they say it often enough then it starts to sound like it makes sense.

The chart above is graphic proof that even a 7 year old can time the market to some degree given the right tools. Charts available at StockTradingReview.com

How simple - 2 moving averages saved a fortune for anyone who was watching. Why hold something that is obviously falling in price.

The same two moving averages got investors in again when the trend turned up.

This strategy didn’t give an entry signal until May 2003, 2 months after the low, but anyone who hedged or exited on the moving average crossover in November 2000 missed being fully invested during the majority of the Bear market, when many investors lost between 50% and 70% of their capital, or worse if they were leveraged.

And remember, for savvy traders this is for long term investment in Stocks, not our more speculative holdings.

This is their wealth creation money - their retirement account. This is the money they don’t put at unnecessary risk.

When the market goes down like this, Fund Managers call it Volatility. They won’t call it what it really is - a Bear Market!

No, investors would take their money out of Mutual Funds if the Managers said that we were in a Bear Market, and they would lose those wonderful trailing commissions and management fees.

Just call it a bit of volatility (down 50% on the S&P, 80% on the Nasdaq - volatility??) and investors will stay in for the long term because that’s what their advisers tell them to do, or they will miss the bottom when it eventually comes - does that make sense to you?

Now nobody can tell for sure how far any rally will go, or if a bear market is over, until well after the event. But this simple Moving Average crossover system has kept Peter’s friends on the right side of the market for many years.

They ride the up-legs of the market, and stay out of the down legs. They put their cash in Money Market Funds while the trend is down and wait for the rallies.

Another hedging strategy they often use is to buy Put options to cover their entire Index exposure - for example, if their Index fund position is $50,000, they buy long dated put options, say 12 months to expiry to minimise the time decay, to cover this level of market exposure.

They think of it as an insurance policy - they pay insurance on everything else they own, so why leave their Stocks and Mutual Fund investments at the mercy of the market - wealthy people stay that way because they protect the downside.

Time decay on options is an issue of course, but watching a long term portfolio decrease by 50% or more and doing nothing should not be an option for any serious investor.

The idea is simply this - saavy traders hold positions that are with the trend, whether it is in Property, Shares, Mutual Funds or Bonds. They do not hold un-hedged assets that are in a sustained downtrend.

Holding Stocks and funds that are going up is like riding the up escalator, it’s easy to make money. By holding Mutual Funds or Stocks that are falling, it’s like running up the down escalator - you have to work hard just to stay in the same place.

Then, if you stop running, it takes you right down to where you started again. This is not the way to build lasting wealth.

This is blindingly obvious - but it is amazing how many otherwise intelligent investors have lost fortunes during the bear market that started in 2000.

A smart trader’s advice - put a couple of Moving Averages on the funds and Stocks you hold in your long term investment portfolio, then ask a small child what the trend is.

If they don’t say up and you’re still invested, all he would say is make sure you have your position hedged!

To Your Trading Success,

Tony Spann and the Team

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TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This strategy works in the short term, but can lead to difficulty in the longer haul. It also prevents investors from finding the great opportunities that experts have missed.

Most of the time, when the market is rising merrily, following the crowd can be profitable, even if gains are only average. For those who are less adept at making market decisions, following the right crowd may even demonstrate wisdom. But eventually, one’s lack of independence takes dominance. The real problem arises at the turning points. When the market has been moving up, and suddenly takes a major downward shift, investors must be able to think for themselves and adapt. Those who cannot are left holding the bag. Just as important is the ability to recognize an upturn when everyone else believes there is no hope. Last April, those who stayed on the sidelines missed great opportunities. Luckily, our readers were able to achieve excellent gains. Of course, no one can perfectly time the market, but it is helpful to recognize when turns are possible, or even likely.

Similarly, when picking stocks, it is important to see past the opinions of “experts” and recognize real value. In recent years, “Wall Street” has become more of a marketing machine than a center for careful analysis.

Over time, we can learn who the few viable analysts are, but in the meantime, most of us are almost better off ignoring the salesmen in the media.

Let’s look at how following the crowd works. Quite recently, an election surprise in India led to a market crash. The crowds who couldn’t understand the results exited India’s markets in droves, driving them down significantly.

This is a clear opportunity for investors. India has tremendous potential. Yet, those who simply follow, without looking beyond the immediate news, will miss that reality. Our analysis of India’s politics is that everyone is now on board for free markets. There is no longer a great impetus for socialism. Therefore, a victory by the Congress Party doesn’t foretell an effort to disrupt the strong economy. It merely indicates that many are satisfied with life, but probably more secular than the previous ruling party. The reaction by investors here is confused. Clearly, the fact that the Communist Party’s support for the new government may cause some concern, but the leading parties in the new government have long-since abandoned any socialist leanings. Among the first meetings after the new election was a summit where it was decided that Congress would continue on the path, despite objections from the left. No party that wishes to be re-elected will discard a successful economic strategy. Thus, we strongly believe that the success of the Indian economy is safe.

Investing in India is still not easy. A limited number of shares of Indian companies are available on U.S. exchanges, each carrying relatively high P/E’s. Countless smaller companies, likely with better prospects are available on local exchanges, but purchasing those is costly for the small investor; we must look for more practical ways to approach these markets. One useful method is to invest through diversified closed end funds selling at discounts, such as the Morgan Stanley India Investment Fund (IIF). These fund managers have better access to local research and markets, and have people on the ground to evaluate the situation on a daily basis. A similar method is to buy Exchange Traded Funds (ETF’s), which may be available for some nations or regions.

At the same time India’s market fell, the Brazilian market took a heavy hit. While we are still optimistic about the Brazilian economy, we believe the risk factors there may be stronger. Firstly, the leader of the government is unabashedly socialist, despite the fact that they have recognized the importance of foregoing socialism to keep the economy strong. However, once the economy strengthens, it remains unknown if Lula da Silva will pursue foolhardy anti-economic policies. Secondly, there is some uncertainty regarding Argentina’s ability to maintain stability, and another collapse in Argentina would again draw Brazil into the slump. Thus, while we are willing to invest small amounts in Brazil, we feel the situation in India is more secure, and better prepared for long-term growth.

Diversification is, as always, a good strategy to help protect against uncertainty. Being diversified across countries is also wise, even though international diversification has lost some of its impact in these days of globalization. Still, if some money is placed in markets that are less dependent on our own, we stand a better chance of being protected in times of U.S. weakness.

“The crowd” seems to feel more comfortable investing “at home” regardless of where the real opportunities are, and where the risks may be. Instead, we should look worldwide, seeking to reduce risk and increase returns. If, for example, it is momentarily safer to invest in Australia than in the U.S., that’s where we should put our dollars. The U.S. remains attractive at amount of investment dollars in that large powerhouse economy, but are less excited about 2005 there.

Keep investing, and keep alert. In times like these, changes may take place more unexpectedly than normal, but we can adapt if we remain vigilant and avoid following the crowd.

To send comments or to learn more about Scott Pearson’s Investment Management services, visit http://www.valueview.net

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor’s Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.

Stock investment advice is easy to find. Do you get cold called by brokers with the latest investment tip? I have, as have countless others around the globe. And many of us have lost a lot of money to these people. So, how can you avoid some of these pitfalls?

In general, if you get cold called by anyone, the best stock investment advice that I can give you is to leave them alone, no matter how appealing, or how plausible the sell is. Many of the people and firms who operate in high pressure sales environments, operate outside the law. And these people usually start with a cold call.

If You Are Cold Called, Steer Clear - Rule 1.

Remember that the tactics used can be very cunning.

It is not unusual for disreputable firms to start gently. They will warm you up with a 2 minute call, which invariably will get you excited at the prospect of making some money, on the basis of a deal "which hasn’t come off yet", but they will call you if it does.

And it will.

And so will they!

They often quote shares which are listed, usually on the nasdaq, and it is within my experience for this to occur whilst the price of stocks rises as predicted. Believe me when I say that I was caught, and the the stock prices were being manipulated (this was the subject ultimately of an SEC investigation).

Double Check All Information You Are Given - Rule 2

Another favourite ploy of the crooks is if they know you have previously bought shares which are worthless, they will come up with some cock and bull story about a takeover or a similar machination, and offer ridiculous amounts of money for worthless shares. All YOU have to do is pay a fee to release the funds.

And guess what.

You will lose more money!

If It Sounds Too Good To Be True - It Probably Is! - Rule 3

If you are contacted by anyone you don’t know, contact your local regulatory authority, and check them out. If the broker is not known to them, stay clear.

Ask Your Regulatory Authority - Rule 4

Ask at the outset if the stocks being peddles are restricted. Most of the cases I have come across where victims have been defrauded, have involved the infamous regulation S stocks. If the stocks in question are regulation s, and you might have to push the point, then don’t get involved.

Ask If The Stock Is Regulation S - If They Are - Run - Rule 5

For many of us, this advice will come too late, and we have already been caught. If so how do we know we have been caught, and can we complain?

There are certainly some questions that one can ask oneself which, can help make your mind up if you might have been caught. Ask your self the following, and see if the scenario applied to you:-

1. I didn’t understand, and it was never explained to me, that the shares I was buying could not be sold for at least one year and possibly longer.

2. I didn’t understand, and it was never explained to me, that the shares I was buying were not traded on a proper stock exchange and might never be traded so might never be sold.

3. I didn’t know, and wasn’t told, the extreme risks associated with Regulation S stocks, up to and including a swift loss of up to 100 per cent of my capital.

4. My personal finances and my investment needs make me unsuitable as a buyer of Regulation S stocks (e.g., because I have a modest income and cannot afford to take risks, I am elderly and cannot afford to wait in the hope shares will be quoted in the future, I am retired and cannot replace lost capital).

5. I would never have agreed, had I known, to an investment where the company whose shares I was buying was actually making a very large payment to the broker. This would have destroyed any feeling that the broker was making a recommendation for my benefit and not in return for payment.

6. Sales calls from the broker were very enthusiastic and almost promised big, fast profits; this was misleading.

7. The broker never recommended ‘normal’ shares to me, but only Regulation S stocks, as if these were the only shares suitable for my needs.

8. Every Regulation S stock I was sold (or almost every one) collapsed and became worthless or near worthless. The law of averages suggests this is not just bad luck but bad skill on the part of the broker who recommended every one of them so enthusiastically, and made a profit on each sale.

Some of you reading this might think that this is flight of fancy stuff. Well, I can assure you that it’s not. This is the real world, and real people get hurt.

Robin Banks has been a victim of investment stock fraud, so is well placed to give advice to others on how to avoid it.

Stock Investment Advice

THERE’S SOMETHING TO BE SAID FOR standing firm in the face of opposition. Interestingly, most of the best stock decisions have come at times when the mainstream is saying precisely the opposite. Predictions like these can be valuable if one is to build an investment strategy around their view of the world.

The appraisal by the minority over the past few years that inflation would return (while most of Wall Street was bemoaning DEflation) has proven to be true. As we’ve pointed out in the past, it can be readily observed in oil prices, real estate, and dozens of other commodities where no source of cheap imports is available.

As Steve Forbes remarks in Forbes Magazine’s May 23rd commentary, “oil became expensive because the Fed has been printing too much money.” In an earlier article, I mentioned that what we’re really seeing is just the effect of a falling dollar, rather than rising oil prices.

Some might wonder how we think of the dollar as a falling currency, because it certainly seems to have been rising against the Euro in recent months. Still, it may be more accurate to think of the Euro as simply falling faster than the dollar. Indeed, now that both France and the Netherlands have voted to reject the EU Constitution, the entire structure of the EU may be called into question, and while we don’t foresee the collapse of that institution, we do believe it will weigh on the currency for a time. As we have said in the past, the attempt at unification is itself no more than a grand experiment, and the currency that accompanies it can be viewed as no more stable than the underlying structure.

Still, none of this makes us view the dollar as necessarily strong. In a world where the Indian Rupee, Romanian Leu, South African Rand and other historically undependable currencies are rising steadily against the dollar, its silly to think of our currency as anything but weak.

In real estate, many suggested in the past that a real estate bubble may be developing, but also that much of the rise in prices may be coming from inflation as well. Indeed, if any price collapse does occur, it may be some time from now, and some regions may hardly feel it. The gap in price between the large California cities and mainstream America is reportedly wider than ever before. It’s best to use caution in the red-hot markets in Cali, NY, and Mass., but the rest of the country seems fairly priced. One should not be too worried about prices that have risen no faster than the price of oil. While others have predicted (endlessly, it seems) that homebuilders ought to fall apart any day now, a few have continued to recommend some of the best ones and seen sizeable profits result for our readers.

Recently, a few financial managers have decided to take a position on Harley-Davidson stock that differs from most of the investment community. While Harley’s quarterly earnings were indeed below expectations, the minority rejects the investment community’s hysterical suggestion that this is the end for the motorcycle maker. In fact, they firmly believe this will turn out to be a small blip in the longterm upward trend.

It is decisions like these that set these advisors apart from much of the investment world. It seems that many of the writers in “investment-land” are content to parrot the projections of corporate lackeys and government bureaucrats, without so much as a scintilla of independent analysis. Alas, as the demand for investment advice has grown, it may have outstripped the supply of quality analysts, both in news reporting and in the investment industry itself. This would explain the quantity of drivel coming from multiple sources these days.

We can occasionally find kindred spirits in the media: while it is invariably best to disagree with Business Week, Fortune, and most of the TV business news-trivia reporters, a few – like Forbes, Barron’s, or TV’s Louis Rukeyser or Paul Kangas – still provide thoughtful commentary from time to time. Overall, though, the U.S seems to have reached a distressing time in investment reporting.

Most reporters and publications are content to simply repeat what they’ve heard, play on emotions, and call it complete coverage. I suppose it makes sense that eventually coverage of business news would descend to the same level as broader news coverage.

In times like these, it is important to select a few good sources of quality information. It is just as important to wean ourselves from poor information sources. If your newspaper, magazine, or broadcast station has ceased offering thoughtful analysis, stop wasting your valuable time. Utilize your time more productively on the few meaningful sources of information.

In light of so much fluff in the media, it is increasingly important to stand apart from the mainstream. You need information resources that are willing to do so, as well. Contrarians (investors who have bucked the trends) have fared well in the investing quandary. Today, contrarians’ biggest advantage is that they are willing to stand out and avoid falling for the latest hype. Mindless followers, in an age of meaningless information, will eventually get slaughtered by following mediocre advice once too often. Don’t tolerate lackluster information resources. Seek out quality.

To send comments or to learn more about Scott Pearson’s Investment Advisor services, visit http://www.valueview.net

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor’s Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.

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?

Mutual funds must report quarterly what stocks they are holding. You can get those reports if you want them. I can’t see where it will do you any good if you are going to blindly hang on to the fund.

A few professional traders will request these breakdowns only if a fund is greatly outperforming the market. They will see what stocks the fund manager has that is making this fund do so well and may buy those stocks. Very clever.

Did you notice that the investor is only looking at the best funds and not at the underperformers or the average performers? Now check your portfolio. Is what you own in the top most profitable funds for the past 3 or 6 months?

I know your broker told you that you have to look at the returns for the past 5 or 10 years. What nonsense. Do you care what the fund has averaged for the past 5 or 10 years or do you want to own one that is making money now?

Fund managers are constantly trading trying to increase the return for their investors. It is a shame most of them have not done a better job. They are always comparing themselves to the S&P500 index. When they do that well they think it is wonderful and they never stop bragging.

The S&P500 index is an average of the market. Mr. Fund Manager gets excited doing an average job. Does your boss like it when you are average? He expects more from you. And you should expect more than average from any investment you make especially if it is recommended by an “expert” broker or financial planner.

If anyone does an average job he will be employed until the boss finds someone who will do a better job and then Mr. Average can find the door. That should be the same way you examine the stocks and funds you own. The nonperformers should be sold and new ones found that will make money or go to cash. Don’t rely on your broker. His company never wants you to sell.

Investors who buy for “the long haul” are long term traders. They are not knowledgeable enough to sell when the market is going down as it did in 2000. When there is nothing to invest in then cash is the best position you can have. Having your portfolio in cash in a one or two percent money market account will many times outperform owning stocks or mutual funds.

Everyone who invests is a trader. It is only the time period that is different.

Copyright 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.

Before they go over the cliff to their destruction these little furry ones get together for a party and celebration. Each tells the other how smart he has been with his investments and buying and selling of stocks and real estate.

Wait a minute. Did I say lemmings? I think I meant investors. It seems they had that same party in January 2000 and it was a doozy that lasted for several months. A great time was had by all. They did not have one in 2001 as membership dropped off. Nor again in 2002 and by 2003 there wasn’t anyone around at all.

The lemmings (oops, investors) had gone over the cliff. And they were such nice little guys too. The few at their party who tried to preach caution were drowned out with loud squeals that the market was going to 40,000 or maybe higher.

This new crowd said it will never happen to them as they are not going to put their money in that risky stock market. Oh no, there is a really safe investment that always goes up – real estate. There is only so much land and no more is being created. The population is expanding so the demand will continue and prices can only increase.

Even for the novice speculators there is a place to make big bucks. They are joining real estate clubs just like the old stock market investment clubs to which they have previously been members. Put in a few thousand and watch it grow as the real estate market keeps going up and up. These investors know they are on the verge of great expectation that will mean wealth. Wealth without work or effort. Maybe they forgot how much they lost from the expert advice in that previous investment club, but everyone knows real estate is a sure thing.

A stock investment is just a piece of paper, but real estate you can feel the dirt, walk through the building and slam the doors. That’s solid. You can’t miss. With each deal they recognize how they are getting smarter and smarter. Hurrying, doing nothing constructive to make their fortune. Just like in 2000.

For more than a year the professional traders, insiders and large institutions have been quietly selling their stocks and I am now beginning to hear of sales of major properties. Just because someone has a lot of money doesn’t mean he is smart. These groups can be as wrong as the little investor.

Real estate may continue to be an excellent investment, but speculation in real estate can be hazardous. If, or maybe I should say when, this market stops going up or even starts down it is very hard to sell a property. Payments must be made and upkeep maintained. It is possible to rent out some houses or offices, but the income ratio today does not allow a breakeven to costs.

These real estate lemmings don’t seem to care. They are gathering in larger groups and are working under the greater fool theory.

This is a time for caution as it was in 2000 for stocks. You don’t want to go over the cliff again.

Copyright 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.