Stock Market Crash

Are you ready for the next big stock market crash? For the conservative investor, resist speculation…since asset allocation programs don’t factor speculative prices (or price to value comparisons). Think hard about that for a moment. What is a crash anyway? It’s a price correction on an over-valued stock market.  

How would you invest, if the market was going to crash tomorrow? Would you be 100% cash? Would you be in bonds? Or would you wait for the crash and buy stocks at a low price?

For most investors, it’s easier to just buy and hold for the long-term. For stock brokers it’s easier to just give advice based on the old strategy of buy & hold, since a stock broker has to spend 80% of his or her time soliciting for new clients. But, let’s put those issues aside for a moment to consider if you were to buy and hold, and simply held your position through all the market cycles (both up & down). Your return would be around 9.6%. But if you consider, getting out of the market at the worst times and then ride the bull market up, your return would be around 20% (a buy and hold…then sell strategy). What would you want? Hopefully, the later of the two choices

Do not take the course of investing in single securities…when the sky is falling. Leave this type of investment approach to professional investors. If there are reams of data to support an opposite market direction, take your money and run! It’s not the return on your money that counts…it’s the return of your money that counts.

Investing is made up of an uncertain future, made by decisions with incomplete financial data to support investment decisions. For the conservative investor, it’s better to be out of the market when the market is simply un-decisive towards a bullish run.

So, if you believe the market has crashed, or will get worse…stay out of harms way! You’ll be thankful that you did.

Sincerely,

John Bagwell

The Truth About Financial Products.com

www.thetruthaboutfinancialproducts.com   

Holding Long-Term

It’s interesting how people interpret the truth…especially when commissions are involved.

Markets change, but your portfolio holdings do not…and unfortunately you lose money. Brokerages, stock brokers, and limited representatives will tell you the biggest lie of all; “hold long-term” while the market change and you lose money.

There are three problems that most people are unaware of. One, a broker must spend 80% of their time soliciting for new clients. They cannot give you the time or dedication needed…since they must earn a living. Possibly millions of Americans may lose money to what is called “securities” neglect…simply because the broker must solicit new clients. This is why having a dedicated stock picker (such as a mutual fund portfolio manager) is truly the only way to go (concerning an investment portfolio).

Unfortunately, when you hire a stock broker you are hiring someone who (likely) does not have an audited past performance record. So you are basically going in blind. This is another reason for choosing a mutual fund based on prior positive consecutive returns. You know a mutual fund portfolio manager has an audited return, and he’ll be working himself to death, constantly analyzing the portfolio…for your benefit (every day).

Two, you hear and see a lot of brokerages and stock brokers pronounce the market is bullish, when everyone around you is losing money. They show an “index-to-time” graph showing that “long-term” the market is going up (per se). But millions of people lose their investments in those “tiny” blips on those “index-to-time” graphs…which they don’t tell you (or hide deep in the initial account disclosures).  

Third, brokerages and stock brokers are confined to Federal & State securities acts governing what’s called “churning.” Churning is when you constantly make recommendations to buy or sell securities within a specific account to make commissions…which is a violation of the securities acts. This by itself…is very deadly to a brokerage or stockbroker. And this is why, you see commercials on TV explaining to hold “long-term.” Not that it’s a general good idea, but the fact is it could be deadly for the brokerage to be caught with it’s “pants down” by promoting analytical trading…causing it to come under review by the SEC for trying to do good.

There you have it…the truth. And the bottom line is; if you want to make money with securities, it better be in the mutual fund arena or you’re not going to get the full attention and service you deserve in the securities market.

Sincerely,

John Bagwell

The Truth About Financial Products.com

www.thetruthaboutfinancialproducts.com