|
Finance Articles
|
|
Forecasting the Stock Market
By Al Thomas
Consumer Debt Management It was fun whilst it lasted. You applied for a couple of credit cards, had a store card on the go and even took out a hefty car loan not so long ago. The more purchases that you made on your cards the higher your monthly repayments became and now you find yourself in the position of making repayments each month with nothing left in the bank. It was easy getting yourself into debt but it`s a lot harder digging yourself out of this hole. Having lived the life of Riley for quite some time the reality has hit you hard and you now need to find an effective solution that can help you to manage your finances better in the future. Help with Consumer Debt Managementcan be found through debt solution teams. They provide structured Consumer Debt Managementadvice to tons of people and can provide you with a plan to help you to get yourself back on your financial feet. One of the schemes that the debt management firm can provide you with is a structured plan for all of your unsecured loans. They will calculate what you can afford to pay each month, negotiate with your creditors and you`ll then pay the Consumer Debt Managementfirm one fixed monthly figure from then on.
Of course, your broker will send you gobs of slick material about various companies that predict they will double or triple in the next 12 months. On the New York Stock Exchange there will be about one half of one per cent (0.5%) of companies that will double this year. Are you smart enough to pick those winners? I?m not and I am considered a professional trader. And I am sure your broker isn?t either. He just wants to make a commission and is probably promoting a stock his brokerage company wants to push. Every investor wants to know the future and will send money to some ?expert? who will send him news about a company that only (?) he knows. And pigs can fly. One thing about the market. It is almost impossible to keep a secret and everyone knows everything about other companies. As soon as some ?analyst? finds a cogent fact that can influence a stock price he will share that ?secret? with a few close friends. Within minutes the ?secret? is known by hundreds of thousands and is immediately reflected in the price of the stock. If you do get sucked into one of these money traps by some smooth-talking salesman or newspaper verbiage I strongly suggest you immediately plan your exit strategy. Without an exit plan you can easily lose a large amount of your ?investment?. This is not an investment; it is a gamble and should be treated as such. The first thought of any professional trader is ?if I am wrong how much am I willing to lose?? Maybe 2%, 5%, certainly no more than 10%. Pros understand that small losses are OK, but never take a big loss. From 1982 to 2000 it seemed everyone was a financial genius. How many of those folks kept those big winnings from 2000? Almost none. Most lost 40% to 60% of their money. Brokers said, ?Hang in there. You are in for the long haul?. Unfortunately he did not tell you that Modern Portfolio Theory is based on a 40 year time line. Yes, but understand you don?t need to predict anything. Don?t forecast. What you can easily learn is follow the major trend. You bought in 1982 and you sold out in 2000. The trend can be found in many ways with the simplest being posted every day in Investors Business Daily newspaper under the IBD Mutual Fund Index. When the Index price is above the 200-day moving average you own equities and when it is below you are in cash or bonds. Nothing complicated, Don?t try to forecast the market. Let the market trend tell you. 
|
