Peer Groups

Whenever I see mutual fund comparisons in the trade publications and in the financial section of the newspaper they almost always mention a specific fund and tell you how good it is in relation to its peer group. A peer group is a specialized sector of mutual funds that all invest in about the same type of stocks or areas of the world or size of companies or some such categorization.

Does this help you make money?

No.

Why?

You have several dogs. A minature poodle, a regular poodle and a very large poodle. On the outside they look very similar, but in performance they can be very different. In a race with a greyhound they will all lose. In a tracking contest with a beagle they will not be able to find the possum. In a contest with a retriever they will not get the bird as quickly. However the large poodle is bigger stronger and can do more than its counterparts. So what? You have the wrong dog for the job.

When you go hunting you don't want a poodle you want a pointer, setter or beagle depending upon the prey. When you invest your hard-earned money in a mutual fund you want the best performer for the type of hunt in which you are engaged and that hunt is for maximum appreciation of your investment. Your prey may change form (from a duck to a possum) and as the prey changes so should the animal (fund) you use (invest) also change.

If you had stayed invested in the best technology fund you could find a year ago, the best one in the entire peer group, I can guarantee you have lost money. The sector has lost more than 75% of it value. It makes no difference if you have the best dog of that breed. If it can't do the job you must change dogs. (Pun intended.)

The important thing to remember when choosing a mutual fund is to find one that is in a sector that is strong NOW, not a year or 3 years ago. When you go back for 3 years or 5 years you will find that there has been a period of time when that sector had or has a very big decline in value. When ANY fund starts down more than 10% to 20% (you decide) it is time to sell it for another fund that is still increasing in value.

When we are in a bear market, as we are now, you may not be to locate one that is going up. Do not listen to any broker who says that a group cannot go any lower. You must wait until you see it increasing in value every week for at least 2 months or more before committing any funds.

You only want to be invested in the best no-load fund in the strongest peer group at all times.

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

---

How Eating Bitumen Made Me a Better Trader

Trading is a fascinating activity.There are so many layers to... 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

Bottoms Ups

If you have talked to a stock broker or financial... Read More

Hot Stock Trader: How to Pick Momentum Stocks with Ease and Simplicity

Most stock traders know that momentum trading can be a... Read More

Will the Stock Market be Lower in October?

The stock market often closes a week in the middle... Read More

The Shadow

The Shadow knows. There used to be a radio program... Read More

Inverted Interest Rates

Inverted interest rates? What's that? Who cares? Even if you... Read More

The Cub; II

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

I Love To Lose Money

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

3 Components Needed for Beating the Market

Time to look back2004 is over, now we are in... Read More

Discipline

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

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds... Read More

A Funny Thing Happened on the Way to the Stock Market

On the 40 year journey through the turmoil of a... Read More

Trading For A Living

How many times have you said to yourself, "I'd like... Read More

401K-itis

Are you one of those many people who dread reading... Read More

Trade Stocks for Real

I read a comment by a forum member on another... Read More

9 Deadly Trading Mistakes!

The following are a list of nine things you want... Read More

Some Good News for A Change

Before we get into all the good news out there,... Read More

Play another Day

Money management starts with protecting your capital, realizing profits and... Read More

Kick The Tires

Before you buy another car you walk around the lot,... Read More

The Stock Market is a Roller Coaster: Prepare for the Ups and Downs

IT'S REMINISCENT OF THE OLD children's tale about an old... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 2

Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More

Stealth Bull

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

Choosing a Stock Broker

If you were to find that you had some severe... Read More

Buying Stocks and the Importance of Correct Timing

An investor can find and research the best stock on... Read More

Look Out The Window

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

How to Short Stocks? How to Make Money when Your Stocks Go Down by Shorting

The stock market can present you with a lot of... Read More

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

Wall Street Paradigm

In 1960 an engineer working for a watch company in... Read More

What is Involved in Peak Performance Trading?

There is so much involved in developing peak performance, that... Read More

Small-Cap Stocks: The Beginning of the Journey

When an individual investor wants to roll up his sleeves... Read More

The Next Bull Market

We are already in it, but you can't see it.... Read More

Buying New Issues

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