Forecasting the Stock Market

Every day I see in the financial section of newspapers how to forecast what the market will do in 6 months, 12 months, several years. "Ten stocks that will double in the next 6 months." Right! I have trouble trying to forecast what it will do tomorrow. Do not trust any who claims he knows what the future will be for the market.

Of course, your broker will send you gobs of slick material about various companies that predict they will double or triple in the next 12 months. On the New York Stock Exchange there will be about one half of one per cent (0.5%) of companies that will double this year. Are you smart enough to pick those winners? I'm not and I am considered a professional trader. And I am sure your broker isn't either. He just wants to make a commission and is probably promoting a stock his brokerage company wants to push.

Every investor wants to know the future and will send money to some "expert" who will send him news about a company that only (?) he knows. And pigs can fly. One thing about the market. It is almost impossible to keep a secret and everyone knows everything about other companies. As soon as some "analyst" finds a cogent fact that can influence a stock price he will share that "secret" with a few close friends. Within minutes the "secret" is known by hundreds of thousands and is immediately reflected in the price of the stock.

If you do get sucked into one of these money traps by some smooth-talking salesman or newspaper verbiage I strongly suggest you immediately plan your exit strategy. Without an exit plan you can easily lose a large amount of your "investment". This is not an investment; it is a gamble and should be treated as such. The first thought of any professional trader is 'if I am wrong how much am I willing to lose'? Maybe 2%, 5%, certainly no more than 10%. Pros understand that small losses are OK, but never take a big loss.

From 1982 to 2000 it seemed everyone was a financial genius. How many of those folks kept those big winnings from 2000? Almost none. Most lost 40% to 60% of their money. Brokers said, "Hang in there. You are in for the long haul". Unfortunately he did not tell you that Modern Portfolio Theory is based on a 40 year time line.

Yes, but understand you don't need to predict anything. Don't forecast. What you can easily learn is follow the major trend. You bought in 1982 and you sold out in 2000. The trend can be found in many ways with the simplest being posted every day in Investors Business Daily newspaper under the IBD Mutual Fund Index. When the Index price is above the 200-day moving average you own equities and when it is below you are in cash or bonds. Nothing complicated,

Don't try to forecast the market. Let the market trend tell you.

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.

---

Overseas Investing: Going Against the Mainstream

TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More

Different Types of Mutual Funds

This is a guide to the different types of mutual... Read More

No Load Mutual Funds or Exchange Traded Funds (ETFs)?

If you are fed up with early redemption charges and... Read More

Pathways

During our travel down life's path we come to many... Read More

Selection Vs Direction

As I have said many times before in this column... Read More

Stock Market Course .... Day Trader Online Seminar ... Can You Generate Profits Trading from Home?

When it comes to stock market trading it PAYS to... Read More

Pension Plans

If you have a pension plan at work you will... Read More

Forecasting the Stock Market

Every day I see in the financial section of newspapers... Read More

Bargain Basement - Finding Stocks That Go Up

Have you been listening to the talking heads on CNBC-TV?... Read More

The Three Little Pigs Went to the Stock Market

Three little pigs went to the market to stock up... Read More

Evaluation I

An insane person cannot evaluate an insane evaluation system.As you... Read More

The I Word is Coming to a Town Near You

Hello Inflation, it has been awhile, I see you on... Read More

How To Buy And Hold

One of the most believed bits of conventional wisdom from... Read More

Whitewater Stock Market

Ever done any whitewater rafting or canoeing? Long periods of... Read More

Mutual Fund Honor Roll ? Buy High, Sell Low by Chasing Performance

Buy high and sell low -- It's not a typo.Millions... Read More

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... Read More

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

The Value of Stocks of a Company

The debate rages all over Eastern and Central Europe, in... Read More

Cash

How many people went to a cash position this week?... Read More

Prospering with Mutual Funds: How Anyone can ?Afford? an Investment Advisor

Recently I was invited to appear on a live CNNfn... Read More

Keep Your Profits

It looks like we have now entered a new bull... Read More

Good Stock Market Tip; Good Return!

Forget making a profit; instead focus on the income provided... Read More

Quality Investment Information: Standing Firm In the Face of Opposition

THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More

Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading?

Ever notice how behavior in one area of life can... Read More

Basics of Stock Market

Financial markets provide their participants with the most favorable conditions... Read More

I Love To Lose Money

Well, not really. What I mean is I don't mind... Read More

When Should I Sell?

People are always asking me when should I sell my... Read More

Stock Valuation using the SMP Model

Disclaimer: Please note that I do not necessarily purchase, own,... Read More

KISS Formula

There are formulas for just about everything, but it has... Read More

No Load Mutual Funds: Investment Hype vs. Investment Help

With the internet such a huge part of our daily... Read More

Direction

It is difficult to make money in a bull market,... Read More

Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips

Day trading is all about making buy and sell decisions.... Read More

Value Investing: Selecting From The Bargain Bin

Picking a beaten-down stock requires a different kind of selection... Read More