Acapulco - The Stock Market Dives

There is a famous cliff on the ocean in Acapulco where experienced divers jump into the sea. It is very dangerous because the water at the base of the cliff surges from a depth of 2 feet to 12 feet. The diver must time his leap so the water is at the greatest depth when he enters or he could easily be killed as many novices before him have been. Timing is the key.

This reminds me of the stock market where timing is also the key to wealth or poverty.

The ocean waves surge in and out against the cliff in short cycles. The tide moves in and out in longer cycles and is very predictable. When you look at Nature you will see there are relatively predictable cycles everywhere. We see day become night, the changes of the seasons and birth to death of our own bodies. Some changes are so microscopically small we cannot see them and others are so long we are not aware they are taking place. Everything has a season or a cycle. It is up to us to be able recognize it and use it to our advantage.

People ask why did the stock market go up (down) today? These short moves can usually be laid to some recent event. Then there are longer surges and regressions of months or a few years. We have bull markets and bear markets that seem to have historical cycles that last decades. These latter cycles run for about 16 to 18 years and move similar to the surges of the sea against the Acapulco cliff. A knowledgeable market timer will buy when the water is out (stocks look their worst) and hit the ocean (sell) as the surge is at its highest.

The ability to do this is NOT guess work. It is an understanding that cycles apply equally as well to the stock market as they do to the forces of Nature. Unfortunately, the principles to learn this very simple technique are not taught in college. Most must learn the method in the school of hard knocks. It can be very expensive.

In our recent bull market from 1982 to 2000 we had one of the predictable long cycles. The mindset of the public has become so hardened to the bull concept that they (and almost all brokers) have forgotten that each up surge is followed by a down surge of approximate equal length. This is not very comforting to current owners of stocks and mutual funds, but once they realize it they can do the prudent thing to protect their money - sell. Then they can buy U.S. Treasury bonds and wait for the next bull market to arrive. It is not very exciting to be in cash, but it is much better than seeing your money slowly disappearing before your eyes.

You must learn entry and exit of the stock market just as the divers in Acapulco have learned the correct moment to jump off the cliff.

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

---

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

Stealth Bull

If you have been watching the stock market at all... Read More

Complacency

During the month of January the Dow Jones Industrial Average,... Read More

Social Insecurity

Just about everything you have been told about Social Security... Read More

Option Trading Basics

Options trading can increase the profits you make when trading... Read More

Stocks Options Trading

Let's assume that you want to make some serious money... Read More

High Price/Earnings Ratios and the Stock Market: a Personal Odyssey

After some forty years of banking and investments, I retired... Read More

Trading Tips No 8: Picking the Best Stock Market Price

Carefully thinking through your goal as a trader is of... Read More

Traders, Defend Against the Dreaded Death Spiral.

It has often been said that there is only two... Read More

Dont Fight The Fed

One of the great truisms of Wall Street is "Don't... Read More

Buying New Issues

Has your broker been calling you recently with the "great... 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

Stock Trading Secrets?

How often have you come across an advertisement or e-mail... Read More

Precision Money Management

This article describes the model of a natural relationship between... Read More

Parachute Investing

Ever jumped out of an airplane? It's OK if you... Read More

Stops Make Money

During the day I watch CNBC-TV, the stock market channel.... Read More

So, What is This Stock Market Thing Anyway?

We've all heard of the stock market and probably have... Read More

Swing Trading Strategies

Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More

Stock Trading Diversification

This is the continuing story of our two imaginary traders,... Read More

Making a Stock Watch List

I am taking the time to help others learn the... Read More

What is a Trading Plan ? and Why You Need One?

How do you make money without picking tops and bottoms?I... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Stock Market Investments

If there is one term over-used when talking about making... Read More

Investment Discipline

One of the great "secrets" of successful people is discipline... Read More

My Stock - Right or Wrong

We all know the expression, "My country, right or wrong",... Read More

Living Trust Investing: Income Considerations when the Grantor Dies

A common problem I often see when working with living... Read More

Fake Money

Reach in your pocket and take out that big roll... Read More

On Line Stock Trading: Small Cap & Micro Stocks Go Up and Down - How Can You Profit?

Success in small cap & micro cap stock trading like... Read More

Never Fall In Love!

Recently I watched my favorite football team lose a vital... Read More

A Good Fund Manager

Every Wall Street analyst, financial planner and broker will tell... Read More

Inertia Syndrome

When it comes to buying a stock or mutual fund... Read More

Stock Valuation using the SMP Model

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

Lemmings Are Gathering

Before they go over the cliff to their destruction these... Read More