Time To Sell

By Al Thomas

Wall Street has been doing its best to raise it’s Titanic (stock market) from sinking. The DOW sank from 14,000 to 6500.
They have the nose of the ship up (to almost 10,000) and are furiously pumping water out, BUT the hole is too big. It is about to sink back down and no one knows where the bottom is.

In beginning of 2008 I wrote, “I don’t know what mysteries 2008 will bring, but I will predict that anyone without an exit strategy is going to have a bad year.” Unfortunately for almost all retirement accounts I was right. Almost every mutual fund account lost about 40% of client’s money.

Folks, pay attention. the Titanic is about to head for the bottom again. If you don’t have that exit strategy in place you are about to lose more of your hard earned cash.

Few fund managers have an exit plan to protect their investors. One of the basic caveats every investor should know is if the fund manager is required by the fund charter to remain fully invested at all times. The investor is stuck.

There is a way the investor, NOT the fund manager, can protect his money. He must set a limit price. If the fund drops below that price Mr. Investor must call the fund manager and have his money transferred into a money market account. Cash is king while the market is sinking.

If Mr. Investor is not willing to take responsibility for his own money his full name will be Mr. Poor Investor.

Like the captain of the Titanic few fund managers can see the iceberg that lies so closely ahead. They plow on blindly full speed ahead.

Technical analysts (of which I am one) see the many icebergs. There are many. Volume increases each time the market indexes go down and decreases when they rise. That shows there are more investors willing to sell than want to buy. This is a strong sign of distribution by “smart” money.

The rally has failed to bring the price back by 50%. A sign of weakness.

The low for October of the Transportation Index has been decisively broken. This Index that few people watch shows whether goods are moving. It includes merchandise from ports to cities and exports from our factories to overseas. And don’t forget coal, cement and sand for construction.

There many other very sophisticated numerical methods that extract points of strength and weakness. Today many have turned down even as the market has been able to hold near 10,000. They become weaker each day. Some event will occur that will suddenly have investors and traders running for the exit.

For the cautious investor who will not heed these words at least decide for each position how much he is willing to lose if this analyst is right.

Do it now.

Personal and business bartering are growing and here to stay.

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 2009 Williamsburg Investment Co. All rights reserved.

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