Wednesday, February 18, 2009

Talking Heads

Everyone and anyone that offers financial advice, writes a column, talks on TV, or sells some service ought to have full disclosure statements that detail relationships to financial things and most important, show the rates of returns of any investment vehicles they are involved in.

This past weekend the local paper had an article by a finance guy. He talked the same old mess heard for weeks if not longer now as to how now was the time to be buying stocks. NPR also had some people on saying the same thing.

This as the market tanked about 4% yesterday. Fine advice indeed.

I have followed the markets and my money for over two years now. I have come to understand the big picture a clearer now. The market and the economy moves in cycles. We are currently in a period of contraction and it is not a time to be owning much in the way of stocks or mutual funds. What money I have control over is in cash or cash equivalents awaiting a new bull market.

Only price pays. Nothing else. Ignore the talking idiots, it does not matter what the say. Some simple math can show how to see long term view of the market. Take a look at the chart. Note that the long term 200 day average is around 110 right now and the shorter term averages are much less, this means bad market. Stay away from stocks.

I am saving as much money as I can. 401K contributions, Roth IRA are all maxed out. I'll save more money in non retirement accounts also. But I will wait for this mess to change. I hope you can do the same.

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