Dont Fight The Fed

One of the great truisms of Wall Street is "Don't fight the Fed". For the long term investors this has resulted in greater profits. When the Federal Reserve Board hikes interest rates look out and when the do it 3 times in a row it is called "3 jumps and a stumble". We have just gone through the stumble and it has been costly.

When you go back in history you will find that the stock market has almost always gone down substantially after the Fed has jumped interest rates 3 time in a row. As of this writing the Fed has lowered rates twice and we are looking for a third cut very soon. When that happens you will know that there is very little likelihood of the market going lower.

The stock market moves more on anticipation than fact. Another old saying is "Buy the rumor and sell the news". Because of what Mr. Greenspan has done we anticipate the market will rally and the rumor is he will do it again so we have two reasons to think that stock prices will move higher. He caused all this mess and now we look to him as our savior. It should be as the Queen of Hearts said, "Off with his head". Unfortunately he is appointed and cannot be removed from office even by the President. Just don't give him undo credit for lowering interest rates when he should not have raised them in the first pace.

For the smart long term investors when they see the Fed raising interest rates they should immediately pay attention top their stock and mutual fund holdings with the idea of selling them and placing the funds in a money market account. The investors won't be making any capital gains, but they also won't be standing in front of the train as it comes barreling down the track and runs them over. No, you don't have to sell immediately as it takes several months for interest rate increases to take effect - usually about 9 months.

When rates are lowered there will also be a time lag of 6 to 12 months which gives you opportunity to start picking some winners for the next bull market. Forget that Wall Street conventional wisdom of "do your research". Research is basically worthless. If you can find it out then everyone else already knows it and it has been reflected in the price of the stock. Let me give you a method that is too simple for your broker. He will tell you it won't work except it does.

Every Friday there is a listed in Investor's Business Daily on the back page about 40 charts of the week's best performing stocks. Notice they are all in uptrends. You could buy almost any one of these and check it weekly to see that it remains in the trend. When it falls out, sell it.

There are other equally simple methods your broker will not recommend. They want to keep the Wall Street mystique. Once you find out how easy it is to make money you won't need them. It is your money. Are you willing to work a little to make it grow?

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

---

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Paddle Your Canoe

At some time in your life you have been on... Read More

You Don?t HAVE To Be Trading

As a novice trader, you'll often feel the need to... Read More

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend... Read More

I Love To Lose Money

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

Market Success

Who are the successful investors?There are those who follow the... Read More

Maximizing a Stock Market Investment

Maximizing a stock market investmentThere are several factors an investor... Read More

Trading Tips No 8: Picking the Best Stock Market Price

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

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Losses, not Profits, will Stop You from Trading in the Market

Should the market turn against you, it is important that... Read More

E-mini Day Trading - Day Trading for Beginners - Stock Market Timing Software

I mean it when I say that. While plastic silverware... Read More

Value Investing: Selecting From The Bargain Bin

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

The 1% Solution

You probably know the story of Sherlock Holmes and the... Read More

Emotional Trading

The single most expensive stock market trades are those made... Read More

Again With the Bubbles?

A few years back ? it seems like an eternity... Read More

Where Is The Beef?

Where is the beef? Or maybe it should be where... Read More

The Stock Market - How Just One Question Will Tell You All You Need To Know About Your Stock Broker

Last time we looked at the real performance of the... Read More

Stock Insurance

You have a lock on your house. You have a... Read More

Buy and Hold Investment Strategy

"Buy and hold" is one of the most heralded investment... Read More

Trading For A Living - Part 1

There can't be many traders who haven't at least considered... Read More

Look Out The Window

Quick, look out the window. It's raining. No, the sun's... Read More

Online Broker Trade History Not Doing the Job

Let me start by saying that...Most online brokers do not... Read More

Patterns

The Law of Chaos is the theory of random unpredictable... Read More

Stock Market Investing Odds

The greatest stock market myth is the idea that investing... Read More

Selection Vs Direction

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

The 10 Commandments

Wall Street has been preaching for years and years to... Read More

The Cub; II

We keep hearing about this bear market and that the... Read More

Valuation

Every day I hear from the "experts" on CNBC-TV and... Read More

The I Word is Coming to a Town Near You

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

Its Better

Question: How does it get better when it gets worse?Last... Read More

Bad News is Good News

For weeks, no, months we have been bombarded with nothing... Read More

Its A Duck

If it walks like a duck, quacks like a duck... Read More