Dont Fight The Fed

One of the great truisms of Wall Street is "Don't fight the Fed". For the long term investors this has resulted in greater profits. When the Federal Reserve Board hikes interest rates look out and when the do it 3 times in a row it is called "3 jumps and a stumble". We have just gone through the stumble and it has been costly.

When you go back in history you will find that the stock market has almost always gone down substantially after the Fed has jumped interest rates 3 time in a row. As of this writing the Fed has lowered rates twice and we are looking for a third cut very soon. When that happens you will know that there is very little likelihood of the market going lower.

The stock market moves more on anticipation than fact. Another old saying is "Buy the rumor and sell the news". Because of what Mr. Greenspan has done we anticipate the market will rally and the rumor is he will do it again so we have two reasons to think that stock prices will move higher. He caused all this mess and now we look to him as our savior. It should be as the Queen of Hearts said, "Off with his head". Unfortunately he is appointed and cannot be removed from office even by the President. Just don't give him undo credit for lowering interest rates when he should not have raised them in the first pace.

For the smart long term investors when they see the Fed raising interest rates they should immediately pay attention top their stock and mutual fund holdings with the idea of selling them and placing the funds in a money market account. The investors won't be making any capital gains, but they also won't be standing in front of the train as it comes barreling down the track and runs them over. No, you don't have to sell immediately as it takes several months for interest rate increases to take effect - usually about 9 months.

When rates are lowered there will also be a time lag of 6 to 12 months which gives you opportunity to start picking some winners for the next bull market. Forget that Wall Street conventional wisdom of "do your research". Research is basically worthless. If you can find it out then everyone else already knows it and it has been reflected in the price of the stock. Let me give you a method that is too simple for your broker. He will tell you it won't work except it does.

Every Friday there is a listed in Investor's Business Daily on the back page about 40 charts of the week's best performing stocks. Notice they are all in uptrends. You could buy almost any one of these and check it weekly to see that it remains in the trend. When it falls out, sell it.

There are other equally simple methods your broker will not recommend. They want to keep the Wall Street mystique. Once you find out how easy it is to make money you won't need them. It is your money. Are you willing to work a little to make it grow?

Al Thomas' book, "If It Doesn't Go Up, Don't BuyIt!" has helped thousands of people make moneyand keep their profits with his simple 2-stepmethod. Read the first chapter athttp://www.mutualfundmagic.com and discover why he's the man that Wall Streetdoes not want you to know.

Copyright 2005

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

Law School to Provide Tax Help Inside INdiana Business (press release), IN - Jan 5, 2009 Taxpayers with annual income of $42000 or less are eligible for the help if they have not received income from the sale of stocks, mutual funds or homes or ...

$72 billion was pulled from market in October The Tennessean, TN - Dec 24, 2008 By ES Browning • THE WALL STREET JOURNAL • December 24, 2008 One of the hallmarks of the long market downturns in the 1930s and the 1970s has returned: ...

Valparaiso University law school to provide tax help nwitimes.com, IN - Jan 5, 2009 Taxpayers with annual income of $42000 or less are eligible for the help if they have not received income from the sale of stocks, mutual funds or homes or ...

New Money features for you USA Today - Dec 15, 2008 They include: •Year-to-date returns for stocks, mutual funds and exchange-traded funds (ETFs). These can be found by entering the name or ticker symbol in ...

Like other stocks, mutual funds show heavy losses during 2008 LubbockOnline.com, TX - Dec 27, 2008 By Tim Paradis | AP NEW YORK - There was one safe bet that mutual fund investors could make in 2008 - that the stock market was a place to lose a lot of ...

High school investments team wins game Greenwich Post, CT - Jan 4, 2009 The Greenwich High School investment course is more akin to a college-level course covering stocks, mutual funds, bonds and other securities. ...

Be wary of US treasury bonds in 2009 Stockhouse, Canada - Jan 5, 2009 They pulled money out of stocks, mutual funds, money market accounts, even bank savings accounts and CD’s, and poured it into US T-bills and bonds at a ...

Value? Growth? Both! Motley Fool - Jan 2, 2009 The distinction between value and growth stocks is such a bedrock assumption that Morningstar routinely classifies stocks, mutual funds, and ETFs as one or ...

City pension funds may cost taxpayers Allentown Morning Call, PA - Jan 4, 2009 ... the crumbling economy has pummeled Allentown's pension funds, which rely on stocks, mutual funds, real estate and other investment tools for growth. ...

A better bailout alternative American Thinker, WA - Dec 18, 2008 Any type of funds may be used: CDs, bonds, stocks, mutual funds, cash, money market funds. - IRA owners can contribute any percentage of their qualified ...