Inertia
One of the basic laws of physics is that a body in motion will remain in motion unless disturbed by another force. What has this to do with the stock market?
For the last 2 years the long-term trend of the market has been down with a few momentary deviations. When a baseball player hits a ball it comes off his bat at full speed and as it makes its arc through the air it slows down and is buffeted by the wind. Sometimes he hits a weak shot and once in a while he gets a home run. You can almost tell when it leaves the bat whether it will be a good one.
On March 1 and March 4 the market came to the plate and it went up so fast and with so much energy it looks like we have a home run in the making. It has been my experience not to argue with an accomplished athlete. The athletes we are dealing with here are the professional traders such as hedge fund and mutual fund managers. They have come forward and put their money where their mouth is. It looks like the ball is going to go a long way.
You as the small investor will want get on board while the ball is in the upward trajectory. Picking individual stocks is extremely difficult as I discussed in last week's column, but it can be done if you want to do the work. There is an easier way.
No-load mutual funds are the answer. Good ones (that means those that have been going up steadily for the past 6 months) are relatively easy to find, Do NOT buy any fund with a commission charge. If you do you will be starting in a hole and must crawl out before you have a chance to make money. Brokers will tell you that the load funds are better. They are lying.
There are several places to look. At the library you should see the Investor's Business Daily newspaper. In the Mutual Fund section you will find the top 25 funds for the past 6 months. This is not published every day so you will have to look in several issues to find it. You can make a list of the first 15 and in the same newspaper is the listing of all mutual funds you will see their toll free number. Call each one to be sure it has no commission charge or redemption fee. You can select from this group for your investments.
If you don't have a computer at home use the one at the library and go to www.smartmoney.com. Under mutual funds they will show you a list of the best performing funds for the past year. They also show if they have a commission charge. From this list you will be able to buy some very good no-load funds.
Which ones you buy are not that important as long as they are going up. Never keep any fund that is not on one these lists. When they stop going up it is time to sell them.
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
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