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.



Rocket (that's his name) reminds me of a one of those people who buy a stock and hold it. At first while it is going up there is great pleasure and then euphoria until they know they are market geniuses. That's the drunken stage. Finally when the market turns against them they fall over not having enough sense to quit (sell) and later when realization returns they have a huge hangover (called hindsight) - and no money.

Can these 4-footed animals teach us 2-footed beasts anything? Can we be smart enough to quit while we are ahead? Rocket (and his friends) continue to make the same error time after time. We are supposed to be smarter so let's learn from their misconduct.

If you own stocks and/or mutual funds and the market is going up it is super catnip and we keep buying knowing that somewhere over the rainbow we are going to be rich and retire like kings. Almost none of today's investors ever think about selling. Wall Street tells us to buy and hold. They don't want you to sell because if you do they quit making money. Brokers make nothing on money market accounts.

Today with money market accounts paying less than 1% investors know the market will come back up. That is what all brokers preach. That is their catnip; their promise of better times ahead (with no plan to protect your cash). If they take that catnip promise away you might sober up and get rid of those losing stocks and mutual funds.

The great mother of all stocks, AT&T, well, it used to be, has dropped from $100/share to $14. What are those widows and orphans eating for supper now? Not steak. Maybe cat food.

When your equities are no longer rising and many are declining it is time to exit the market. Give up the catnip. When the trend stops its upward angle it is time to sell. Of all methods of investing the safest and most reliable is trend following. It is the catnip on the way up, but when the trend starts to decline you realize you are one smart cat and you are sober and walk away (sell).

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

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

 Continue for more related information:
RELATED RESULTS:


 

Hill of Hope
Just about now everyone is confused as to which way the stock market is going to go - up or down. For the past 3 years it has been headed south, but the...

Losses, not Profits, will Stop You from Trading in the Market
Should the market turn against you, it is important that you design a system that will produce as much ...

Big Buildings Can Mean Big Economic Disaster
AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New York City, to be the world's tallest building, economist Mark Thornto...

Lemmings Are Gathering
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 ...

The Bottom?
Every day I hear someone on CNBC proclaim that "this is the bottom" and you should get in there and buy all those "bargains". "The valuations of the DOW ...

Dont Ask Your Broker
Unfortunately, most of you who are reading my column are suffering some substantial losses in the stock market. Whether it is mutual funds or in...

Its Better
Question: How does it get better when it gets worse? ...

Dividends
When is a dividend not a dividend? ...

Why the Majority Fail at Stock Investing
The gleam and bright lights of Wall Street lure in many new investors each year, only to send them home crying to their frie...

Financial Crime
Congress recently passed another new law that is supposed to outlaw financial crime. Corporate officers will be sent to jail for "cooking the bo...
Table of Contents | Article-Max Directory