Aug 20, 2007 - Issue #072
Full of Baloney!
Dow score card for the week ending 8/17/07.
DJ-30: 13079.08 -160.46 -1.21%. The Real World DJ-30: 53.63 -0.66 -1.21%.
UP: 9, Down: 21.
Trends (weekly): This is the subjective part.
Rising 4 (-4) 13%:
GM, KO, MMM, UTX.
Consolidating 9 (+1) 30%:
+*AXP, CAT, +*DD, -*GE, IBM, INTC, MCD, -*MRK, -*PG.
Declining 17 (+3) 57%:
AA, AIG, -*BA, C, DIS, HD, HON, -*HPQ, JNJ, JPM, MO, MSFT, -*PFE, T, -*VZ, -*WMT, XOM.
+/- denotes change of direction.
* denotes change of category.
Full of Baloney!
Self-made millionaire and author, Phil Town, appearing on CNBC's Closing Bell with Maria
Bartiromo (aka The Money Babe) after Friday's market close, got into a rather lively and
unexpected debate with a gentleman from the Kiplinger financial services organization.
Maria was asking her guests what, in their opinion, was the best investing strategy for
the individual investor to follow.
The Kiplinger representative came up with the usual "buy and hold for the long term".
Phil Town said that 85% of all market trading activity was conducted by institutional
money managers whom, at times, bail out sending prices crashing.
When elephants stampede, mice get nervous. Individual investors who, by virtue of their
smaller size and maneuverability, should get out of the way and move into cash and get
back in after the market bottoms out.
The Kiplinger man said that, regardless of the market, it was impossible to lose money
over a twenty year period if one was invested in mutual funds.
To which Phil Town said, "You're so full of baloney!", and went on to quote several
twenty year periods where mutual fund investors had lost money by following the "buy and
hold for the long term" philosophy.
The man from Kiplinger, condescendingly, asked if he would be kind enough to tell him when
the market hit bottom?
To which Phil Town laughed and replied, "That's easy. When the institutions move back in!"
You can read about Phil Town's book, Rule #1: The Simple Strategy for Successful Investing
in Only 15 Minutes a Week! (See Beat the Market/ Rule #1: Don't Lose Money!).
Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!