Years ago before all the electronic sensors
miners would take a canary down into the shaft.
He was a very pampered bird as he represented
life or death. If he dropped off his perch
unconscious the miners ran for the exit as fast
as possible. The little guy had detected poison
fumes. Yes, they carried the canary out when
they left. There are many pitfalls in life that are not
life or death, but it would be nice if we could
have a special “canary” to warn us of a
calamity. One of those major catastrophes would
be the loss of a large portion of retirement
funds. There are few investment canaries, but
most are complicated or expensive; however,
there is one that will warn you and costs less
than a canary. In fact it is free. Most brokers don’t know about it, many don’t
want to learn and most brokerage houses will not
allow them to use this simple signal. Brokers
are in business to get and keep your money
“working” (for them). Your cash in a money
market account does not fall into that category.
They never want you to sell even when your
equities are going down and you are losing your
shirt, pants and underwear. “Hang in there. The
market always comes back.” You need a “canary”. As long as stocks are going up Mr. Mushroom
can sit back fat, dumb and happy as he did in the
1990s. Since 2000 the scenario has changed.
Hopefully Joe Mushroom did not lose all his
money from 2000 to 2003, but many took a big
hit. It need not happen again. The investor needs to know the general
direction of the market and especially the
direction of his stocks and funds. Most
investors who are saving for retirement have
jobs and other commitments that do not allow
them to be active traders. They need a very,
very simple method that can be looked at once a
week or even once a month. Once a week or even once a month you can
go on the Internet (and if you don’t have that
connection you can do it at the library’s
computer). Find www.bigcharts.com. It’s free.
Put in the symbol of the mutual fund or stock in
which you are interested and click on the red
box marked “Interactive”. I like to use a 5 year
time period which can be selected. Scroll down on the left to “indicators” in
small print, click and then choose Moving
Averages, SMA and to the right put in 200. Click
Display Chart and you are done. As long as that red 200-day line is moving
up the investor should hold his position. The
canary is singing. When it turns down sell. It
doesn’t get any simpler than that. This is an
investment canary for the long term investor. When the canary falls of his perch (the 200 line
turns down) run, don’t walk to the nearest exit. Al Thomas' best selling 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
to receive his market letter for 3 months at
www.mutualfundmagic.com to discover why he's
the man that Wall Street does not want you to
know. Comments to al@mutualfundmagic.com Copyright Albert W. Thomas All rights reserved.
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