Every day I hear from the ?experts? on CNBC-TV and the radio gurus that the way to buy stocks is find value. One man?s Rembrandt is another man?s connect-the-dots and fill in the spaces. Valuation is like beauty. It is in the mind of the beholder.

If valuation is the key to buying stocks then there should be some kind of a formula to determine what is undervalued and over-valued. In every industry there are formulas for standards of performance. For cars we want to know the zero to 60 miles per hour in how many seconds. For soap we want it to be 99 and 44/100 percent pure. For alcoholic beverages it could be how long it has been aged. And on and on.

Yet in the stock market we have no hard and fast set of rules by which to judge a company performance. Ah, and there?s the rub! No matter how good a company performance might be it may have no bearing on the price performance of the stock. You can find good companies that are within a sector that is doing poorly and yet one company can be making huge profits and sales, but the stock price is going nowhere. There need not be any correlation.

When you are in a bull market almost every stock goes up ? even the dogs. When you are in a bear market almost every stock goes down ? even the best ones. We ended an 18 year bull market in 2000 and almost without exception every stock headed for the exit.

Bull and bear markets follow relatively standard patterns of about 16 to 18 years up and 16 to 18 years down and the valuations go right along with them. If you own stocks or especially index funds during the bear periods you will be lucky to have broken even at the end of the 16-year cycle. Cash in your mattress will outperform market returns while the bear is in charge.

During these bear times there will be periods when the market will have a nice advance such as the one we saw start in 2003. These intermediate rises can ultimately bring many investors back into the market only to lose it when the rally is over and true valuation returns.

One valuation measurement for the overall market is the Price/Earnings ratio of the S&P500 Index. The median number for the historic purposes has been around 14. Today it is running about 21 which is considered high. When bear markets end the P/E can be about 6 or 8. There are other factors to be considered when buying any stock or fund, but the one thing that is most important is to have an exit strategy. Without one you will give back your profits.

No one knows exactly where the top or bottom of a market move will be. Knowing conventional valuations is one tool to help your buying and selling decisions.

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

On Monday, November 25, 2000 Investor’s Business Daily listed on page B1 the Top 25 Growth Mutual Funds for the last 36 months along with their performance for the year 2000 to date. Only four showed a profit this year of 21% and the other three had increases of 12%, 5%, and 5%. Fifteen had loss of from 10% to 28% and the other 6 were down slightly.

In the column next to them there is a list of Top 25 Growth Funds for the past 3 months for the year 2000 to date. Only 2 had increases in price for the year 2000, 4 were even and all the rest are showing losses for the year.

Now pay attention and think about this next sentence. Not one mutual fund appears in both lists.

What is the significance of this? It very simply tells you that buy and hold is NOT the way to make money with mutual funds.

I have been preaching for years to buy only no-load mutual funds and hold them only as long as they are going up. When they stop going up you sell them (paying no commission) and find another fund that is going up as the place to have your money. In this current bear market the latter is hard to find so what do you do? Put your money in a money market account and don’t worry about the market going down and dragging your investment with it. Protect your capital!

Don’t throw up your hands and say I can’t do that because my broker says to buy and hold – the market always comes back. It is not his money. It is yours. You must be the one to initiate the action to protect your capital. Brokers are not taught how to do this. I know – I used to own a brokerage company.

Brokers have been smart enough to learn, but taught all the wrong things when it comes to investing money. They claim you can’t time the market. WRONG again. They never encourage you to place stop-loss orders so you won’t lose all your money when you buy a new stock or fund and they never encourage you to use a trailing stop to protect the profits you have made.

I know there are people reading this column who have had stocks that have doubled, tripled, even more and now have that same stock that is now selling for less than they bought it.. Where was your broker when all this was happening? If he is so smart why didn’t he tell you to sell at the top? This also applies to mutual funds.

What I am trying to get across is the simple message that you cannot buy and hold. The secret every knowledgeable investor knows is to protect his capital first and then to protect his profits second.

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

What is the first step (and often last) for the new daytrader? Turn on CNBC and wait for the news, of course (don?t deny it, you have been there). Then when you hear the late breaking ?real time? news, you buy good news (or sell short bad news) in an attempt to beat the other 8 million listeners. Sound like a winning plan?

After realizing that is kind of hit or miss, you decide to fire up the ?real? real time news service. Of course, at this point, it hasn?t dawned on you. It is not just the fact that you are not really ?beating? anyone to the news. You begin to realize, even if I do have the news first, what do I do with it?

Have you ever heard of a stock gapping up big on fantastic earnings; then selling off for 2 weeks? We have all seen it. Good news reacted to in a negative way; bad new reacted to in a positive way. Or, good news reacted to in such a positive way, that the stock gaps so far you are not sure what to do. How do you make sense of all this?

First of all, you may want to just turn off the news. Yes, that is correct. You can keep a list of the stocks that are ?in the news? for your watch list if you like. However, you can skip the part about researching the news. This does not sit well with many traders. They feel it is ?their job? to research these things. The truth is, you cannot. We play people?s reactions to the news, not our personal view of what the news is. We do this by looking at charts.

Below are some examples. Two of them resulted in plays. Take a look at what happened, compared to the news. These three were picked because they all solicited a strong view from many traders, even by email. ?Did you know that xyz had bad news today and are playing it?

Take McDonalds on Dec 24, 2003. You may remember the mad cow scare that day. All ?hamburger places? gapped down, and the overwhelming consensus was (even CNBC told us this) that this scare is the end of the American Hamburger. It would be a ?no brainer? to short these stocks, as they are certain to fall more.

Well, if they are certain to fall more, why didn?t they open at that lower price? You see; there are no gifts. The news was out and was digested by the public. What the stock does after that is not a function of ?good or bad? news. It opens at equilibrium; and then the move can be in either direction. The chart pattern (without any concern for the news) was bearish, but it did not form a ?pattern? that we recognize as a trade. No play was made, though there were possibilities for intraday plays once the trend was set. Notice how long the ?bad news? continued to ?hurt? the stock. Why did it go up? Who knows. Well, there were many commentators and analysts that told us the answer after the close. One of the stories was that the shock sent beef prices tumbling, which would reduce the operating costs of fast food restaurants. Now why didn?t we think of that?

Next is Marathon Oil. Here there was little chance for failure. The company was doing a ?secondary offering? or something similar. On the morning in question, they actually came out and priced the stock below the current price (below where it opened even). Certainly this stock had to go down further. Well, this time, the chart showed a pattern we know well; a tactic known as a Gap play. How could a stock go up in this situation? Read the McDonalds paragraph above. All the answers are the same. We don?t understand enough about secondary stock offerings to try to explain it. Or, if we do understand, it is not worth explaining. That is the point. The best way to play this was to have no knowledge of the actual news; just to know the stock was gapping so you can find the play.

Last was a past play on Delta Airlines. This is a favorite because we had the analysts, coming in to help us determine when to buy and sell stocks.

The big news posted was that Delta may have to file for bankruptcy. Well, we guess that means the stock is worth ?zero?? Or is it worth ?asset value?? That day the stock did not go below $4.53. On the next day, we have a revision of Delta Airlines? outlook to ?negative?. The day after that, Moody?s decides it may cut Delta?s ratings. The stock talks bankruptcy, and then analysts downgrade it? Do we need to pay analysts for this keen information and insight? Note, the stock had never traded under the low set on May 10th, the day the news of bankruptcy was released. Notice the volume that came in on that day. Notice that this volume came in after the stock already dropped 66% in four months. Mr. Analyst, you are now down grading the stock? Where were you during this huge fall? Waiting for the company to tell us they are in trouble? This stock was played long on May 12th at $4.67.

News will move stocks. It can be a means of finding stocks to watch and see if any technical patterns form. Do not get caught up in the game of trying to make trades based on your ?analysis? of the news. Everyone is different in how they handle thing. If you have a difficult time with news, we hope this was helpful to you.

The Stocks2Watch? newsletter has been published since 1998.

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Stock market is an inquisitive place for many. It is because the place has given birth to many millionaires and is also responsible for turning millionaires to locals. Thus the bulls and bears have always been charismatic. Now millions of people invest in the stock market to make good money. The aura of the place is such that it is swarming with people any hour of the day and any season of the year. But only few know that how the stock market came into existence or what actually are its origins.

A short encounter with the past

The oldest stock certificate was issued in favor of a Dutch company in 1606. The purpose of this company was to benefit from the spice trade between India and the Far East. During the 18th and the 19th centuries the trade of spices drifted to England when Napoleon reigned over the place. With the development of United States of America as a colony to British and Alexander Hamilton (the first US secretary of the Treasury) flourished the American Stock Exchange. Hamilton played a crucial role in encouraging the trading in the Wall Street and Broad Street in New York. The New York Stock and Exchange Board now popularly known as the New York Stock Exchange was organized by the traders of New York in 1817 when trade and commerce bloomed there.

A precise survey of the Western stock market

?The Wall Street- a place where the whole of 18th century trade and commerce took place, Wall Street is a recognized place across the globe. The street was termed as Wall Street since it ran alongside a wall that was taken as the northern boundary of New Amsterdam in 17th century.

The Wall Street is known for the J.P. Morgan?s million dollar merger that created US Steel Corporation, the ruinous crisis that resulted in Great Depression and the ?Black Monday? of 1987.

?The NYSE or the New York Stock Exchange is perhaps the foremost and so the oldest stock exchange in United States that is believed to be born in 1792. The significant aspects related to NYSE include the Buttonwood Agreement when 24 stockbrokers and traders of New York signed this accord and established the New York Stock Exchange and Securities Board which is now recognized as the NYSE; the considerable swings that the NYSE saw during the 20th and 21st century; the hitting of the 100 and later even 1000 mark by the Dow around 1971 and the mark of 10,000 that the Dow scaled in 1999.

?NASDAQ is the National Association of Securities Dealers Automated Questions. It is an apparent or virtual stock market where all trading is done through the electronic media. NASDAQ, the global and the largest electronic stock market today was first established in 1971 in United States at the time when computers were not as developed as they are today and it was very difficult to compute. The main exchange of NASDAQ is in United Sates while its branches can be found in Canada and Japan and it is also linked to markets of Hong Kong and Europe. NASDAQ functions by purchasing and selling the over- the- counter or OTC stocks.

?AMEX-was discovered in 1842. The putative father of the institution is Edward Mc Cormick (the commissioner of SEC) who endowed it with its current name. It started its journey as the New York Curb Exchange and its name is factual. The AMEX in contrast to the NYSE operates with the small and more dynamic companies some of which even make it to the NYSE board.

Mansi aggarwal writes about stock market. Learn more at http://www.stockmarketstory.com .

What are you thinking when it comes to your no load mutual fund selections? Are you saving pennies and sacrificing dollars?

Are you spending your time looking at expense ratios, analyzing Morningstar ratings and searching for funds with low fees and no 12b1 charges? If you are like most people, you know these things in and out. You’ve spent hours evaluating them, and your chosen mutual funds cost little to purchase and maintain. But they still don’t perform to your hopes and expectations.

So, why is this happening? Because this kind of investing focuses on cost as opposed to value.

Investors with this philosophy have usually interviewed numerous advisors. But instead of trying to find someone suitable with a sensible approach, they only want to know who has the lowest fees. That’s like going to the cheapest auto repair shop and getting the best price, but your car still doesn’t run well.

Then there are the investors who call or email me wanting a recommendation on a no load mutual fund. They want one with no 12b1 charge, but they completely ignore the issue of how the fund might perform.

Both these kinds of investors spend their time trying to save pennies and in the process they are losing dollars. Instead of falling into the penny wise, dollar foolish trap, here are some ideas that will assist you in evaluating the end profit rather than just the short term saving.

1. Shift your focus from penny pinching to looking at the big picture: What can a mutual fund or an advisor do for you, not how much does it cost? Why? If you buy a given no load mutual fund at the right time and it gains a tidy 15% for you over a 6 week period, would you really care about the costs? If a mutual fund?or an advisor for that matter?can give you superior performance and an increase of several percentage points over your bargain price pick wouldn’t you pay an extra 0.25%?

2. Consider finding a fee-based investment advisor who uses a facts-based methodology and has a track record indicating those kinds of returns. For example, in my own practice I used a trend tracking approach to get my clients into the market on April 29, 2003. Plus, our research and homework led us to recommending funds that gained anywhere from 11.50% to 22.00% over the following 6 week period. How did you do during that time? Do you think any of my clients care whether one of these funds has a small 12b 1 charge? Or whether they have the lowest expense ratios in the industry? I know they don’t.

The bottom line is to look at costs as balanced by performance and that’s where you find value. Then seek true value not simple savings, enjoy healthy dollar-level returns and don’t sweat the pennies.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com; ulli@successful-investment.com

When you start your Penny stocks trading career you first need to decide how much you are willing to invest. You need to remember that this is not a ?sure-fire? income opportunity and that it is possible that you may lose everything, so be sure to not to invest more than you can afford to lose.

That said when you have decided on an monetary amount, whether it is $100 or $10,000 you should avoid the temptation to put all of it into one or more Penny stocks. But why you ask? Surely the whole point of putting the money into your stock broking account in the first place is to invest it.

Well yes and no. . . if you have all of your funds invested at the same time then you lose a lot in flexibility. You have few options when faced with the need to respond to a rapidly rising market. Or to profit form a newly acquired piece of information that one or more penny stocks are about to move upwards.

If you have invested all of you cash and your present portfolio is flat, the only way to buy into rising penny stocks market and get a piece of the action is to either. Use ?your own money?, for example money that is not part of your penny stocks investment fund (and is not money that you can afford to lose) a very bad idea. Or to get on the phone to your broker and see if can sell some of your existing shares so that you can buy into the rising penny stocks.

The first is obviously not really a good thing to do and is more akin to gambling than investment. After all if you couldn?t make a profit with the first group of penny stocks, why do think you could with the second. A more likely scenario is that you are throwing good money after bad, except that this time it is not money that you can afford to lose.

The second, though more sensible than the first, is not really what trading penny stocks is all about. The whole point is to be able to buy quickly if you think that a stock is about to rise. T sell quickly, as well, when the market seems to have to have peaked for your penny stocks, so that you can maximize your profit and sell before the market starts to fall.

If you keep a portion of your assets as liquid in your stock broking account, then you have the flexibility to move quickly as the market conditions dictate. A penny stocks trader without the ability to move quickly is likely to be missing out on many lucrative trades. By keeping around a third of your investment fund as cash allows you to buy into a rising market without having to rush into selling any penny stocks that may be under performing at that time.

That way you get to benefit from the rising penny stocks but can also hold onto the non performing or flat ones until they start to rise or you have decided that you need to cut your loses and get rid of them. Either way the point is that you are not rushed into a decision and can decide based on research and rationality, rather than a need for quick cash to fund your next investment.

The ability to move quickly in response to rapidly rising penny stocks can greatly affect your potential for profits in this most volatile of the financial markets. Keeping a portion of your penny stocks fund liquid will help you to achieve profitability and make the success of your investing venture into the world of penny stocks trading more likely to be a profitable one.

Buzz Scott has 12 years of Penny Stock investing. Big profits can be made in Penny Stocks, but there are also many dangers. Find some insider secrets at: http://www.penny-stock-secrets.com

Did you run out to buy that duct tape yet? Don’t forget the plastic sheeting, bottles of water, canned food and a couple of books to read. What are you waiting for? I know – things to get better so you can resume your normal life style.

While you were waiting did you happen to notice what is happening to your investment portfolio, your retirement account? For the past 3 years it has needed duct tape and plastic sheeting to protect it from the poison gas coming from Wall Street. The gases, otherwise known as hot air, are the news flashes the brokers have been telling you. Surely you have heard – the market always comes back, hang in there, you are in for the long term and other such noxious odors have paralyzed investors to keep them from selling. There was one breath of fresh air you have not heard from your broker and is the one bit of pure oxygen that could have saved your account. Listen carefully and you might hear – SELL.

It is a word hardly ever uttered on Wall Street, but one which you should add to your vocabulary if you ever plan to make a profit in the stock market. Brokerage companies don’t want you to sell because they don’t make any money with your account if you are in a money market fund. When your stock or mutual fund started down did you get a call? Even when a stock loses 80% or more of its value they then change their recommendation from Buy to Hold – and you know where you are holding it.

Any fool can buy, but it takes a wise man to sell. Bernard Baruch, one of the most famous traders of all time, said, I always sell too soon. He was enjoying himself reading a paper on a park bench while stocks were crashing in 1929. The DOW lost 89% of it value. We have not been that unfortunate – yet. However, the NASDAQ has dropped almost 80%. If you owned any of those tech stocks and did not have a trailing stop-loss order you have given back all your profit.

It takes more than duct tape to protect yourself from death and destruction and that goes double for the information from brokers and financial planners. If they have kept you in the market these past 3 years with the Buy and Hold mantra don’t you think it is time you plastered some duct tape on them so you can escape that bad gaseous advice? You might not think yourself to be knowledgeable about investing, but surely you would have had enough sense to sell when a stock or fund loses 20, 30, 40% or more of its value. At 50% loss it means it has to go up 100% to get to even. You don’t want to get even; you want to get rich.

Before that poison gas from Wall Street completely kills your account get some fresh air – SELL.

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

al@mutualfundstrategy.com; 1-888-345-7870

Why? Because I am going to shatter your conventional wisdom as I have many times in previous columns about the lies that Wall Street continues to tell you. This time we are going to go deeper into the economy to unearth the truth about lies the politicians are telling you.

Let?s understand from the beginning that few politicians understand basic economics. Just because they work in Washington does not make them experts about the laws that have been passed or those they vote upon. Politicians do not create jobs or wealth. Don?t feel you are the only one who can?t make head or tail out of government statistics.

The most misunderstood debate today is about OUTSOURCING. ? sending our jobs overseas. From March of 2001 to January of 2004 manufacturing jobs declined by 2.6 million ? a loss of 17%. BUT during that same period there was an increase of 17% in worker productivity and only a loss of 3% in jobs. More goods produced with fewer workers. Those jobs did not go overseas ? only 300,000 did. The majority were lost to better machines and will never reappear. If employment efficiency had not increased we would have even higher unemployment today.

That is why unions hate new machines. Loss of jobs. If a company wants to remain competitive they must be able to produce at the least cost or you won?t have a job. Do you think you would have your job today if your company continued to operate they way they did 5 years ago? Employment continues to increase every quarter even though we lose about 7% or 8% of U.S. jobs every quarter.

Has anyone told you that thousands of foreign companies have opened plants in the U.S? We don?t hear about the small ones only the BMWs, Toyotas and Hondas. According to Peter Drucker, management consultant, we import more jobs than we export. Jobs increased by millions after NAFTA and because of NAFTA.

Will these layoffs continue? It depends upon your industry sector. According to the Bureau of Labor Statistics there were more mass layoffs (50 or more) during this January than any previous January in history – 239,454 ? 1/3rd of those are in manufacturing.

The U.S. is still not producing enough new jobs to keep us even; that requires more than 150,000 new hires each month.

Political demagoguery blames everyone and anyone who is in office. Whoever the president is is the one to blame ? rightly or wrongly. Every industrialized country today has a problem with excess production capacity and is doing weird things to keep their workers on the production line. We are not the only ones with job losses. That does not make the guy in the unemployment line feel any better.

It is our productivity edge that has kept as many jobs as we have now or it would be a lot worse. Free trade is the answer and not tariffs on other country?s goods. As I have written before tariffs are hidden taxes on the consumer and benefit no one. They have NEVER worked in all of history and make more problems than they solve.

Don?t listen to the political rhetoric. You may not like what I have said, but maybe it will start you thinking.

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.

1-888-345-7870; al@mutualfundstrategy.com

If you have been dealing with mutual funds for any length of time, you undoubtedly have faced the question of which is better: Load Funds or No Load Funds. If you are new to investing, load simply refers to the commission paid to the broker selling the fund. No load means there is no commission on the purchase or sale.

Most discussions in the past have centered exclusively on performance comparisons. Even rating services like Morningstar have occasionally chimed in with their opinion. However, rather than focusing only on performance, there are some other issues I consider far more important:

There is a very large amount of stock market research conducted by stock market analysts, traders and other participants in the Australian stock market.

All of the major stock broking firms conduct research as a major part of their operations and provide advice to their clients.

In recent times, there has been a bigger push towards stock market research being conducted by private individuals. This has been made possible through the vast amount of information on the Australian stock market, now available on-line to anyone who subscribes.

There is also a number of stock market research tools available to the public, such as charting software, training and a number of different research techniques, books and service providers.

The two main types of stock market research are:

* Fundamental Analysis

* Technical Analysis

Fundamental analysis involves the use of financial and economic data to evaluate the liquidity, solvency, efficiency and, most importantly, the earnings potential of a given company.

The fundamental analysis kitbag of tools includes the corporate annual report and its financial statements, legal comments by corporate officers, industry statistics and market trends, as well as macro-economic data.

With this information in hand, the fundamental analyst’s goal is to ferret out undervalued stocks, and then buy them in anticipation of the appreciation that should occur, when this value comes to light.

Technical Analysis – A stock market researcher using technical analysis doesn’t look at income statements, balance sheets, company policies, or anything fundamental about the company.

Technical analysis looks at the actual history of trading and the price of a security or index. This is usually done in the form of a chart. The financial product can be a stock, future or an index.

The technical analyst believes that stock market research will show that securities move in trends. And these trends continue until something happens to change the trend. With trends, patterns and levels are detectable. Sometimes the analysis is wrong. However, in the overwhelming majority of instances, it’s extremely accurate.

Technical analysis is stock market research of price action over time and charts are what an analyst works with as their primary record of price action. Behind every price is an investor who had a reason for buying or selling. Traders generally act alone but often their weight of numbers has a direct influence on short term prices.

Researching the stock market with charts and technical indicators is the study of group behaviour and sentiment. It is done with science and art. We use science because we use mathematical formula, computers and statistics

Charting is the study of price action of a market itself as opposed to the study of the goods in which a market deals. Technical analysis is simply a different means of using stock market research to arrive at the same investment objectives. These goals may be summarised as:

* To gauge the relative strength of buyers and sellers;

* To identify preferred times to buy and sell;

* To develop a theory as to how far price may reasonably be expected to move; and

* To formulate a risk strategy.

Technical Analysis Stock Market Research Principles

The analyst attempts to use market history for its predictive value to control positions and to anticipate probable price movements in the future.

Three basic premises serve as the basis of analysis:

* First, market prices follow trends. That is, the flow of prices is not merely a series of random events.

* Secondly, as a random group, participants in the marketplace have responded one specific way at a given price.

* The third principle also relates to the past. History does repeat itself, and it does so often.

Jon Lynch is Marketing Manager of the Capital Intelligence Group of companies, including HomeTrader – Australia?s leading stock market research education centres. We teach you how to create wealth through the share/stock market with great research skills and a customised trading plan or system that is right for you, your situation and your goals. Visit our website and register for your free introductory DVD Learn To Make Money On The Stock Market at http://www.learnshares.com.au