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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 stock market (we used the Dow Jones as a reference point) and the apparent performance that makes the headlines and can be seen by a casual look at a chart or "ballpark" figures - briefly; the Dow went up, for example, less than 50 points between April 1999 and April 2005 - essentially 6 years with no growth! But behind that seemingly "becalmed" Dow there were at least 10 significant moves each and every year totalling many thousands of points! But did the Wall Street Moguls, the so-called "Masters of the Universe" make you any money from those huge movements? No. Of course they didn't! Here's how I know... The web is a goldmine of information. Knowledge that was just not available to the private investor or trader is now there at the press of a mouse button. Forget the Freedom of Information Act - the Internet leaves it standing. Foremost amongst websites offering information about the financial facts of life (the things that affect you directly - Mutual Fund performance etc) is Morningstar.com. And amongst other things, morningstar.com publishes a league table of mutual funds on a weekly, monthly and annual basis. If you check out the table that I have provided at my website (www.TriggerSystem.com - full link at the bottom of the article), you'll see the performance of the top 20 or so mutual funds over the last 10 years. I've chosen the 10 year chart because mutual funds are essentially long term "investments", and which most people seem to keep almost for ever (the chart on my website is by it's very nature a little bit out of date, but things haven't improved too much since that screen shot was taken. If you want the up to date figures just go to www.morningstar.com and search their data base for the 10 year performance of mutual funds) Take a look... You'll see that the top rated fund, over 10 years, has shown a total growth of 23% - which at first sight looks fairly impressive; 23%; wow! But the problem is, that 23% is total growth over 10 years, not growth per annum. So the 23% total growth starts to look like a less than impressive 1.7% per annum compounded (hey, even the banks are giving more than that on deposit). I'll be honest, I didn't believe it either - so I sent off an email to morningstar.com and they confirmed my worst fears - 23% is the total growth over 10 years. Sheesh! And the average growth of all 1304 funds? A less than impressive 7.3% over 10 years (less than one half of one percent)! Check out that hiding place under your mattress - at least you don't have to pay exhorbitant fees to keep your money there. The one certainty is that the Fund Managers will not, personally, have fared so badly - they will still draw their large salaries and enjoy all the benefits of charging you fat fees for their "professional expertise" As Thomas Sowell wrote: "It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong" OK, I know not everybody has money "tied up" in Mutual Funds and some people prefer the higher returns of the Stock Market. So what about the analysts and stock brokers? Well, we all know about Enron and the others - the stocks in the early 90s that crippled so many of America's biggest pension funds. Use the TriggerSystem link (shown below) to view the Enron chart screenshot, which is lower down the page (below the Morningstar.com screen shot). You'll see that on 20 November 2000 there was a "technical sell signal" flagged for Enron when it was trading at just over $80 per share (don't worry about the term "technical sell signal" - it just means a sophisticated trading programme told it's owner that he should SELL). Over the next 2.5 months, Enron's price fluctuated up and down without really going anywhere, until the middle of February 01 when it really started to slide (just as it appeared to have stabilized at $80). As they say, a picture is worth a thousand words, and to save my typing fingers - the numbers speak for themselves. Follow the chart to the right and you'll see that the major stockbroking houses and analysts were still saying "BUY" as the market lost 75% of it's value over the next 9 months. It was only on October 19th 2001 - just 11 months after our "technical sell signal" that the first warning appeared from the Brokers and Analysts - and even then there was a further major BUY reccommendation before Enron slipped again to be worth less than 40 cents on 30 November 2001 - A decline from $80 per share to $0.26 per share in 12 months! And all the time the major brokers and analysts were telling their ordinary customers to either Buy or Hold. And as we later found out, the Brokers and Analysts were telling their biggest corporate customers a totally different story. So, whilst the Stock Market is your best friend (trust me on this one, or look for my previous article) - the people who operate it may simply be their own best friend, and from your point of view, any advice you receive from them should be taken with a very large pinch of salt. And if you still think you can trust the advice they give you, here's the simple "5 word question" I mentioned at the beginning of this article... Ring them and ask: "What Guarantee Do You Give"? Just pick up the phone and ask them about the guarantee they give you regarding their advice. Once they've stopped coughing and spluttering and picked themselves up from the floor, you may hear this well worn mantra: "the value of stocks can fall as well as rise" etc etc. If they're not prepared to guarantee their advice, then frankly their advice is not to be trusted. More next time... Geoffrey Cummins is a full time stock market trader and has spent the last 12 years developing what he calls his "weedy little spreadsheet trading system", giving him some unique insights into the working of the world's stock markets. Under pressure from friends and family, Geoffrey is now making his unique insights and trading signals available to a worldwide audience And unlike your stockbroker, he guarantees you a minimum 300% return on your investment (ROI) www.triggersystem.com/home-based-business-opportunity-thingsnottodo.html">Click here to view the charts referred to in this article No wild claims, just common sense advice and the best Risk Free Trial (a full 90 days for less than $5 a week) on the internet all backed up by his unique 3 part / 300% guarantee. If he doesn't provide you with a minimum return on your investment of 300% (the banks best offer is 3%. Not guaranteed) - he'll give you your money back. No questions asked. www.triggersystem.com">The TriggerSystem?
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Mutual Fund Honor Roll - Buy High, Sell Low by Chasing Performance Buy high and sell low -- It's not a typo.Millions of investors guarantee their failure by selecting mutual funds and stocks based on quarterly or annual performance records. Lemmings Are Gathering Before they go over the cliff to their destruction these little furry ones get together for a party and celebration. Each tells the other how smart he has been with his investments and buying and selling of stocks and real estate. Being Wrong Buying Stock is Okay Being wrong is OK, but let's not carry it to extremes. That applies to everything, but let's limit our discussion here to the stock market. The I Word is Coming to a Town Near You Hello Inflation, it has been awhile, I see you on your way back again. Inflation? What inflation? Oh things like; Energy, diesel fuel, Aviation Fuel, Gasoline, Natural Gas, Milk, Wheat, Corn, Beef, Poultry, Hogs, Soy Beans, Building materials, paper, housing, Auto Prices, Health Care, Insurance, etc. Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading? Ever notice how behavior in one area of life can apply to behavior in other areas of life? For example, I've noticed a number of things while driving that apply to online trading. One of them is regarding how people behave toward traffic signals. A Triple Dipper: How to Make 3 Profits on 1 Stock Trade This is a rather simple strategy with which I am sure a lot of seasoned traders are very familiar, possibly under some other name with which I am not familiar. I wanted to write about it because I don't see anyone talking about it anymore. Prospering with Mutual Funds: How Anyone can "Afford" an Investment Advisor Recently I was invited to appear on a live CNNfn television show to discuss my article "How to evaluate Load vs. No Load Mutual Funds. NASDAQ 800? In November of 2000 when the NASDAQ was trading at 3000 I wrote in this column that the NASDAQ Index would fall to 1500 and I got lots of heat for saying it. Microsoft had fallen from $129 to $60 per share. Investment Attorneys and Garbage Stocks How is it possible that trash Companies are posting less than expected results? Trash Companies are thought of by prudish investors as some of the safest stocks to own. Ask Warren in his Buffet of Essays on Corporate America. Dividend Reinvestment Plans: Investing on Automatic Pilot If you're like many investors who squander those small dividend checks from your stock portfolio, a Dividend Reinvestment Plan (DRP) might be just what you need. Just as its name implies, a Dividend Reinvestment Plan allows you to reinvest some or all of those dividends into more stock of the issuing company. No Load Mutual Funds: Investment Hype vs. Investment Help With the internet such a huge part of our daily lives, many investors have access to a wide range of instant investment information.Whether you're into stocks, bonds, mutual funds, futures or options, there are tons of electronic investment newsletters offering to turn your small stake into a giant fortune. Different Ways of Buying Stocks Let's say you are interested in this one company. You read its annual report, like what you see and your calculation indicates that the stock is trading way below its fair value. Choosing An Investment Stock Broker If you want one.And I don't recommend any broker with whom to trade who will be giving you advice on what to buy and sell. Will the Stock Market be Lower in October? The stock market often closes a week in the middle of a "perceived primary-trend range." SPX closed at about 1,234 Fri, which is between a multi-year Fibonacci level at 1,253 (i. How (NOT) to Buy Mutual Funds When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. Bottoms Ups If you have talked to a stock broker or financial planner in the last few days I will bet they all agree that there are some great bargains out there and now is the time to start buying in anticipation that the market will go back up. You will also find agreement from the talking heads on CNBC and those talk radio station stock mavens. Different Types of Mutual Funds This is a guide to the different types of mutual funds. When it comes to investing in mutual funds, investors have literally thousands of choices. Mutual Fund Commissions You have heard about a particular mutual fund from a friend, saw it advertised on TV or read about it in some publication thought it would be a good buy. Next you call your broker to get his advice before you buy because he is an expert and is there to help you make money. Why Is The Macedonian Stock Exchange Unsuccessful? The Macedonian Stock Exchange (MSE) is not operating successfully. True, some of the parameters which we use to measure the success of a stock exchange have lately improved in the MSE. Investing in Dividend Paying Stocks I was recently interviewed for a press release through a financial question and answer format. One of the questions asked of me in the interview was:Where do you think the stock market is headed over the next five years?My Answer!Charles M.
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