I am here to tell you that there is no secret formula to outperforming the average stock market index (i.e. S&P 500) consistently, year after year.  There is no special computer program and no certain Einstein when it comes to investing.  Don't get me wrong there are great investors in this world, investors that are in a league of their own, but none that have consistently outperformed the market day-to-day, month-to-month, or year-to-year.  Sure, some will say that they can or have outperformed the market over the long-term, but that's compound interest.  They could have a few really good years and a couple of really bad years.  However, averaged out over the long-term (most to be considered 10 years of investing or more) they may outperform the market, but not without risks being taken.

  What if an investor like yourself decided to invest in a guru's portfolio (what they are invested in) at the time when the market drops out of sight and this great investor’s portfolio takes a hit along with the market.  Now all your hard-earned money that you have put into the portfolio has just gone below its book value (the amount of money you actually invested).  The portfolio is not so great now, is it?

  Can you do better by yourself is the million-dollar question?  I know you can because you're a small investor and can get in and out of situations faster than a larger investor (i.e. institutional) if it's a liquid stock (a stock that has a lot of shares outstanding and is easy to buy or sell at any time).
  Remember that small companies have a lot less shares outstanding and are a lot harder to buy or sell especially in times of panic selling.

  The point I am trying to get across is, you cannot believe everything that you hear or see when it comes to investing or anything for that matter.  Nothing is for sure, just like life; you're on borrowed time. The same goes for the stock market, your principal is never guaranteed.  You have to take rumors and opinions with a grain of salt.  Come to your own conclusions and don't get greedy; greed is the number one killer of a bull market and your portfolio.

  Think of the market like mother nature, a meteorologist can not always predict the weather and no one can predict what the stock market is going to do next either.  You have to think of the stock market as "Two steps forward, one step back", stocks advance then cool off.  Of course, you have to do your homework and research to find the right investments that suit your needs first, then realize that the market is like a set of stairs, advancing up on a gradual zigzag line (two steps forward) and then declining (one step back, 10% or more drop is a correction, 20% or more is a bear market) down.   These situations should be taken as an opportunity to take profits when the markets are going up (averaging up) and (averaging down) when the market when it goes down.

  Markets go in cycles (rotation) from sector to sector.  For example, financial stocks doing well in a low interest rate environment, small companies doing well when the dollar is weak, resource stocks doing well when inflation rears its ugly head, multinational companies doing well with a strong dollar and a roaring world economy. Also, most business cycles are 5 years in length, 4 years of expansion and 1 year of retraction, but it isn't always that lengh; it could be longer or shorter.

  You also have to keep yourself separate from people that make momentum investing (sector rotation) like legal gambling, they get addicted, greedy, then get burned 99% of the time trying to figure out which sector (i.e. technology) is going to be the next big mover (winner).  You have to respect the market and appreciate its power and unpredictability.  Don’t try and guess what the market is going to do next, look and see what it has already done.  Learn from your mistakes and listen to what the market is trying to tell you.  Don’t be afraid to go your own way and not follow the herd.  Just remember this, if there isn’t consistent earnings don’t buy it, and if you own a company and the earnings are dropping, sell it.
 
 

  Common Sense Investing
 

  If you really want to learn something about the stock market, think of it like your every day life.  What would you like to buy something that is grade A or grade B?  Would you like to be with a first class bank or second best?  Maybe you would like to own something that is used and outdated rather than something new and in style?  The same goes for investing in stocks.  You want to own the best companies that have a niche (edge) in their industry (the sector that companies are in) that are always putting out new products to keep up with the times and most of all, a company that consistently returns a PROFIT, quarter (every 3 months) after quarter.  I know I would rather own a company that meets or beats the expectations of market analysts rather than owning a company that does not.

  You must also, always remember to watch out for currency fluctuation and taxation on your money when investing in foreign economies.  Taxation laws in foreign economies are totally different compared to domestic economies.  Your own government may also tax your money differently when you decide to bring your money back into your country and the currency fluctuation between the two economies may affect your money.

  Knowing when to take a profit is your next step.  For example, if you make 10% or more on your stock, sell your profit and reinvest it back into the stock (averaging up).  The same goes for when you lose on a stock.  If you lose 10% or more on your stock cut your loss and get out.  If you’re stubborn and fall in love with your stock, invest new cash into the stock.  Once it has dropped 10% or more (averaging down) lowering your average cost base (book value).  This method is called Crystalization.
 Market value is your book value plus and gain or loss incurred on your stock.

  There is one very important thing to remember when it comes to making a profit or a loss, they are only paper profits or losses until you sell or buy more shares.  If you leave your investment untouched for years, compound interest will do the investing for you, turning any paper profits into an actual gain, compounded.
  Remember this, money re-invested back into a stock, either by a company dividend or capital gain distribution, new money invested or averaging up makes compounding work for you.
 
 

  Compound and Simple Rates Of Return
 

  Compound return on your money is the percentage return on your money, year over year, re-invested and compounded.  Compound interest starts to kick in after 1 year of simple interest and really starts to add up after 10 or more years.

  Simple rates of return are percentage returns on your money in one year, compared to another year not compounded.  Your daily newspaper shows you compound rates of return on mutual funds.  Remember that any big losses along the way are averaged out, but so are any big gains.

  You have to be very careful when comparing rates of return, especially careful because the rates of return are based on past performance.
 
 

  How to pick a profitable company
 

   It is very simple. Research a company that has consistently returned a profit, quarter after quarter, year after year of at least 20%.  Myself I like 30% or more, but it also comes with more risk.  Once the company has not made the profit you were looking for, for two consecutive quarters, sell it or if it keeps making a profit add to it by buying more shares.  I know it sounds all too easy, but it really is!

  The stock markets are earnings (profit) driven, period. But other factors inlcude inflation, interest rates, supply and demand.  If a company does not make a profit, investors sell it and if their matching or beating analysts earnings estimates, investors are going to buy it up.  People make the markets sound so complicated when really it is not.  Just look around your house.  Your television might be your favorite brand name; there’s a stock to research. The list goes on of possibilities.

  Think of what your hobbies are, golfing perhaps.  Maybe you love your pet, research stocks about animals.  Maybe you love what you wear, research those names.  These are just a few examples among the thousands to choose from.

  If you look at stock market investing as complicated, you will make it complicated.  Get on the Internet.  There are thousands of web sites that can help you learn more about investing and courses that you can take in correspondence to enhance your investing savvy.  Investing in the stock market does not have to be complicated.  It is just like everything else in life.  Use common sense, don’t get greedy and remember greed is the number one killer of a bull market.

  The more investors are bullish, the closer you are to a top (market has reached it’s peak) in the market, the more investors are bearish, the closer you are to a bottom (market has reached it’s low point) because that means that investors have money sitting on the sidelines ready to be invested.  If investors are fully invested with no money on the sidelines to buy more shares that’s a market top because the stock market needs investors to buy into it for it to go up.  If investors are fully invested with no money to buy more shares, the market has only one way to go and that’s down.  Think of it this way, the more investors are bullish, the more you should be taking some profits. The more investors are bearish, the more you should be taking a position in your stock by buying more shares.

   If you invest money that you cannot afford to lose, you should not be in the stock market.  Also, if your not investing for at least 5 years or more, you also should not be investing in stocks individually because if you get in at the wrong time when the market drops, it could take years just to get back to where you started.  You must also judge how much risk you can handle and what your objectives are.

  Just like stocks, you also must research a mutual fund.  The most important thing to do first is to figure out how long you want to be in the markets, this will help you find out how much risk you can handle and what your objectives are.  Whatever you do, please do not use your equity from your house to invest or buy on margin (borrowed money).

  Many mutual fund companies can set up plans for you to buy into a fund on a bi-weekly, monthly, or quarterly basis etc. or you can set up your own plan to set aside a certain amount of money every pay and buy stocks or mutual funds periodically.
 
 

  How to Cheat And Win
 

  One thing that a lot of big talking investors will never tell you about is how to find a good stock to buy.  For example, all you have to do is look for continuous outperforming mutual funds (i.e. technology) year after year and see what the top 10 holdings are for the past month, quarter or year.  The top 10 holdings are the 10 companies that the mutual fund has most of its assets invested in.  It might invest in 50 companies, but the 10 companies (assuming the mutual fund invests in stocks) that have the most money invested in them are the top 10 holdings.

  I’ll be honest I did it because I didn’t know a darn thing about Internet companies.  I picked the number one performing technology fund, looked and saw what the top 5 holdings were and researched those 5 companies.  This is what I like to call a loophole, loopholes are everywhere you just have to look for them.

  Another thing to keep in mind is when a stock declines by a certain percentage; it takes a greater percentage increase just to get back to where it was trading before it declined.  Let’s do the math and you will understand what I mean.  Lets say a stock dropped from $10 a share to $8 a share, now this is a 20% decrease in price (10-8=2 2/10=. 20 or 20%) now lets say the stock goes back up to $10 from $8 (10-8=2 2/8=. 25 or 25%).

  One of my favorite quotes is the saying “buy on the rumor sell on the news” which means you are buying shares on speculation on a companies good earnings news or the company may be bought out.  So while all this frenzy is going on before the actual news comes out, shares of the company are being bought and sold at a fierce pace.  Then once the news has been released, there tends to be a sell off (but not always) and even a big one if the news is not good.  Speculation can be your best friend or worst enemy, so you have to be careful.
 
 

  Trading Common Stocks
 

  The stocks that you will be trading are probably Common Stocks.  Common stocks are publicly traded, trading on the Secondary Market and carry voting rights.  But in case of a company liquidating their assets, Preferred stock shareholders will get their share of the fortune before you.  Preferred shares hold a fixed number of shares but they do not get to vote on company decisions.  Preferred shares also receive a fixed dividend payment.  Common stocks are the most popular though,  because of their easy availability.

  Common stocks can be bought through investment dealers (stock broker or brokerage firms) or a discount brokerage firm(where you make your own buying or selling decisions with far less fees than a full service broker).

  Every stock has its own ticker symbol (an abbreviated symbol of the company that is listed on a stock exchange).  Lets say a company’s name was xyz, then their ticker symbol might be x.  Therefore, if you want to look up a quote (price of the stock that it is currently trading at), you would look for ticker symbol x in the newspaper under the stock exchange it is listed under or type in x and get a quote on an investment web site which offers stock quotes.

  When buying stocks, look for quality, not quantity.  It is better to own 5 great stocks than 10 mediocre stocks.  Mediocrity is unacceptable.  If you’re looking for mediocrity, buy mutual funds, exchange traded funds or index linked units that track and exchange it is matched against.  Also, stay away from high yielding stocks, stocks that are out of favor, trading flat, lower, fallen on hard times or are hitting their 52 week low (stocks that are trading at their lowest in-traday price in the last year to date) unless you see a turn around in the company’s earnings coming in the near term, then it might be a good buy.  This could be considered a Value stock.
A stock that is always yielding 2% or less with consistent earnings of 20% or more with a price earnings ratio of 30% or less are the ones to watch for a buying opportunity and considered a Growth stock.

  There are many stages for stocks. An IPO (initial public offering), which is a newly listed stock on a Primary market, then sold on the Secondary market.  The company arranges to have its shares listed on the Primary market by an investment dealer and the company then pays them a fee for doing so.  Then once all the shares are divided up they are traded on the secondary market by the investment dealers to retail investors.  Some investment dealers actually owners the stock they are selling and some are just an intermediary.

  There is also an OTC (Over the Counter ie Nasdaq) market which stocks trade over a computer system with no traders on the floor.

  A stocks market capitalization is next, with Micro-cap stocks in Canada having a market capitalization of 50 million or less in market capitalization (shares outstanding x stock price).  Next there are small-caps with 50 million to 500 million in market capitalization.  Small cap stocks seem to do well in the first quarter, especially in January.  Then mid-cap (medium) stocks with 500 million to 3 billion in market cap and finally large-cap (blue chips) stocks with 1 billion or more in market capitalization. In America, the market capitalization is much higher, as there are much more bigger companies. The market capitalization in America is as follows: Big Cap - Market cap of $10 billion and greater Mid Cap - $2 billion to $10 billion Small Cap - $300 million to $2 billion Micro Cap - $50 million to $300 million and Nano Cap - Under $50 million.

  You also have your conglomerates, which are so big and own so many different companies.  They grow at a slower rate with small earnings but with a big dividend distributed per share, very liquid and usually has a high yield.

  There are a lot of alternatives to common stocks like preferred stock.  A stock which receives a fixed dividend payment and shares.  Convertible stocks, which are stocks that can be switched to bonds of the same company.  Stock options are another with bets on whether a company’s strike price (price of stock) is going up or down.  You buy a “call option” if you think the strike price is going up and buy a “put option” if you think the strike price is going down.  If you don’t exercise the option it will expire.  The option does not have to be bought or sold unlike future contracts.  Future contracts, which is a promise to buy a certain product, at a certain price, at a certain time.  Bonds and Money market instruments are also other alternatives to stocks,

  Short selling is another investment option.  This is a bet that a stock price is going down and you borrow the company’s shares and sell it as it goes down to make money on it.  If it starts going back up, you cover and buy the stock back.  Short sellers want just the opposite of what you want and that’s for the price of a stock to go down.

  If you must sell short, at least be smart and short a company with a lot of volume on the downside.  Don’t be a fool and short a stock based on the fact that it has gone up too much or fast with a lot of volume on the upside and very little on the downside. You will just get burned because this stock can turn on a dime on the upside again at any time and you will just have to cover.  In my opinion, short selling is just a loosing battle.  You would have to time the market just about perfect every time and we all know there is no one that can do that consistently.

  Be smart and don’t quit your day job and start short selling because the odds are against you.  Just remember this, the best well-known investors in the world are known for their “stock picking” skills not their “shorting selling” skills.
 
 

  How to read stock listings in the newspaper
 

  First, the 52 week high and 52 week low, which is how high or how low a stock has traded in-traday (market open to market close) during trading hours for the last year to date.  Then the name of the company, the ticker symbol, the closing price of the stock, then the price change of the stock from the opening bell (most times 9:30 am EST) to the closing bell (most times 4:00 pm EST; there are also now alternative trading systems that are open before and after normal trading hours).
Volume (this is how many shares were traded of the stock during the day, quoted in hundreds) could be next, P/E (price earnings ratio, which is a companies stock price divided by its earnings) in english, if a stock has a P/E of 50, then you are paying 50x more for the stock than what it is really worth or trading at.  Then it’s the stock days “high” and “low”, which is how high or low the stock traded in-traday from the opening bell to the closing bell.  This is not always the order of stock listings.

  Some newspapers have more things listed for stocks like div. (dividends, which is a company’s yield divided by its stock price), yield (what a company is yielding, which is a companies stock price divided by its dividend), EPS (earnings per share, which is a company’s profit divided by the number of their shares outstanding).  Sometimes you will have a “bid” and an “ask” attached to the days high and low.  The bid is the buy price and the ask is the sell price.  Day traders try to make money on the spread (which is the price difference between the bid and ask price sold simultaneously) between the bid and ask price.  You have to be very careful when it comes to the bid and ask prices.  The bid  is the price a dealer is willing to buy shares from you and the ask is the price a dealer is willing to sell shares to you.
A lot of market orders on illiquid stocks can have very high price premimums as their is not a lot of buyers and sellers in the market.  So I would recommend using limit orders on stocks under $5 when selecting your bid or ask price.  Very well known or liquid stocks can use market orders as the spread or premimum does not fluctuate as much.
 
 

  A Stocks Moving Average
 

  This could be related to technical analysis, which means investors read into a stocks price movement very closely.  Investors try to interpret which way a stock is going to move, by what it has already done and doing, by researching its price movements vigorously with sophisticated computer programs.

  A stocks moving average, for example, has a 200 day moving average, 100 day, 50 day and a 15 day moving average.  Now these averages are placed on a graph against each other. What you want to see in a stock is the 200 day average on the bottom (which will be a line with not a lot of zigs and zags on it, just a gradual up or down line) with the 100 day average next above the 200 day, the 50 day average above the 100 day and the 15 day average above the 50 day. What you do not want to see, is the opposite of that.

  Moving averages are just another thing you should look at before you buy the stock just to see where it is at and whether it’s selling really high or low.  It gives you an idea where you are buying the stock, whether it’s a value or expensive. A Bollinger Band, is a compliment to the a stocks moving average, as it plots itself around the moving average; one line on top of the moving average, one in the middle and one on the bottom. If the simple moving average (middle band) goes towards the (upper) bollinger band line,  then it is considered over-bought and over-sold if it goes toward the (lower) bollinger band line. Also, the wider the bollinger band, the more volatile the security is and the thinner the bands, the less volatile the security is.
 These methods or tracking a stocks moving average is a pure technical analysis, bottom-up, microeconomics, supply and demand approach.

  Another method of analysis is Fundamental Analysis.  This would be the examining of the over all economy, industry, then company selection or also known as top-down, macroeconomics approach.

  A good indicator of a markets mood, would be it’s advance/decline ratio.  Meaning how many stocks are up on the current days trading session compared to how many are down.
This indicator should be watched closely to give you an idea what the market is doing as a whole.  The next indicator would be what sectors of the market are doing well and which ones are not.  Most times, but not always, this years winner stocks or sector are out of favor the following year, because they they have already has their run-up and need to correct and let the profits catch up to the price of the stock.
 
 

  Monetary policy
 

  The three most powerful words to stock market investors are the Federal Reserve Board for the Americans and The Bank of Canada for Canadians..  The Federal Reserve Board is your best friend and your worst enemy. The Fed is in charge of monetary policy in the US, raising or lowering interest rates to avoid inflation while also controlling the money supply to the banks.  Inflation is the rise in price of goods and services over a period of time. A good steady inflation rate between 2-4 % is considered good.

  Are you thinking what can I do to beat inflation?  Stock Market to the rescue.  The stock market is one of the very few places where you can put your money and beat inflation and put that money back in your pocket.  Bonds won’t beat inflation, term deposits won’t and that little stash you have tucked away under your pillow will not beat inflation either.

  So, you’re wondering how do stocks beat inflation and the other things I mentioned above won’t?  It’s very simple.  Companies take in consideration inflation in their production costs; they work it into their products and  in the end, their stock price.  So, if you have 1000 dollars invested in a stock, it will still be worth 1000 dollars 10 years down the road (purchasing power, not including stock price fluctuations, taxes etc.).  The same thing goes for mutual funds that hold stocks in their portfolio.  A real return bond also has inflation worked into it's calculation.

  When the fed raises or lowers interest rates this is also worked into a company’s stock price as well.  The Fed lends money to banks and banks lend money to companies.  So, if the fed raises rates, it’s going to cost a company more to borrow money from a bank.  So again, this is also worked into a companies stock price.  The fed can raise the lending rates for banks that lend to a company. The fed can also raise the rate for how much a bank must pay to borrow from the fed.

 Everything the Fed does is very closely watched by the world economies and impacts what other countries will do with their monetary policy.  The US is the biggest economy in the world and Japan is second. The green back (US$) is watched very closely also, along with the yen (Japanese$) the Euro (European$) and the British pound  (UK$).  These are some of the biggest currencies of the world.
The fed also keeps it’s eye on certain indicators like the CPI (consumer price index), unemployment rate, workers wages, productions costs, GDP (gross domestic product) and GNP (Gross National Product) and many more, when basing their decision on whether they will raise or lower interest rates.
 
 

  Growth vs Value
 

  There are many types of stocks, but they are sometimes categorized as either a growth or a value stock.  Growth stocks usually carry a high P/E ratio with sometimes no earnings, but have revenues, and are growing at a fast pace with the hope of turning those revenues into future profits.  A company may have a niche with their product and are growing so fast that their P/E may be 50% and may come down after some of the revenues start turning into profits.  So the earnings will catch up with the price, but not always.  Some of the greatest companies have a P/E of 50% or more and have high earnings and revenues. They are out there; you just have to find them.

  Value stocks are companies with a P/E usually lower than 20% before it’s considered a value stock.  There are also other ratios that are used to deceiver whether the stock is a value or not.  Value stocks are usually making a profit, but maybe not a lot of revenues and carry a higher yield.  A growth stock that just has fallen out of favor and has corrected could be considered a value stock.

  Everyone has their own opinion on what value stocks and growth stocks are.  I’m just trying to give you a rough outline of it.   I’m just trying to explain to you how to make money without gambling it all away, help you limit your losses and most of all, explain things that no one else will tell you about, like the hazards or the fine print of investing.
 
 

  Different Types of Stocks
 

  There are many different types of stocks including Technology, Financial, Consumer, Health, Oil & Gas, Precious Metals, Utility and many more.  Just remember two things: Research and Earnings!

  Different types of stocks come into favor at certain times as explained earlier, while others don’t.  It all depends on what stage the economy is in.  Some stocks may be doing badly just because one or two stocks in their certain sector reported bad earnings.  It’s going to have an effect on the rest of the sector considered a “trickle down effect“.  The common thought is that if a couple of companies have had bad earnings, the rest of the companies in that particular sector are going to have bad earnings as well, even though they might not.  You may have a certain stock that reported lower than expected earnings, so all investors think the same and sell off other companies in that sector thinking they are also going to come in under analyst’s expectations.  The stocks in that sector that are reporting good earnings and get caught in the downdraft of another company’s bad earnings could be considered a good buy or value and could also snap back to its highs in a blink of an eye, once investors realize they made a mistake by selling it in the first place.   Learn from other investor’s mistakes so you don’t fall in the same category later down the road.  It’s good to learn from you own mistakes and also from others to.
  Investors trade in herds and you must capitalize on their mistakes.  Most times you can trust what the stock market is doing as a whole, rather than what investors are doing in herds.  History repeats itself and so does the stock market; just in a more modern way.
 
 

  Different types of Indexes and how they Work
 

  The major stock exchange or index in the U.S. is the NYSE (New York Stock Exchange) with the NASDAQ (National Association of Securities Dealers Automated Quotations System).  The NYSE is also referred to as the Big Board with many different types of stocks listed on it while the NASDAQ is heavily weighted with technology and small companies.  These stock exchanges are in the US with others being outside of the U.S. like the Nikkei 225 of Japan, the Hang Sang of Hong Kong, the TSX of Canada, the London Footsie, the French Cac and the German Dax and many more.  The most closely watched index is the Dow Jones in the U.S., which is made up of the 30 best (or considered the best) stocks in the U.S. and sometimes some outside the U.S.  There is also the S&P500, which is made up of the top 500 companies in the U.S. and sometimes some outside the U.S. .

  Market indices are weighted, meaning a really big company with many shares outstanding (its market capitalization) and a higher price, will tend to move the index it is listed on (in point terms whether up or down) more than a company that do not have a lot of shares outstanding and at a lower price.  Consider it this way, the top 100 companies in the S&P 500 could move that Index more than the bottom 400 companies combined.  This is because the top 100 companies are so big and have so many shares outstanding that sometimes it gives you a false indication of what the index is doing and might be only being moved up or down by a handful of heavily weighted companies. Thus is why the TSX of Canada can move sharply in an upward or downward direction, as there are very few big companies listed on the TSX, compared to the Nasdaq and NYSE; so only a few big companies can move the TSX index in eaither direction.

  To find what the market cap (weighted) of a stock is just times its total number of shares outstanding by its current stock price; this will give you a figure in dollars.  This is what the stock is worth in total.

  Most times, the NYSE and NASDAQ will outperform each other at different stages in the economy.  The NYSE has more defensive stocks (bought at end of bull markets) than the NASDAQ, but the NASDAQ has more stocks that are smaller and are growing at a faster pace with above average earnings and revenues, which would be bought at the beginning to middle stage of a bull market.  The NYSE also has a lot of Financial Stocks that will do better at the beginning of a bull market when interest rates are going down, while the NASDAQ has more speculative stocks that will do much better when the market is already on an upswing or getting close to the end of a business cycle and bull market. With that being said, the TSX of Canada is heavily weighted in commodity stocks (oil, gas, metals etc.) which also do well toards the end of a business cycle and bull market.
 
 

  Stock Smarts
 

  Have you ever wished you could do something about that certain stock that you are losing money on?  You hang on to it forever waiting to see if it will ever go up in price again or even back to your cost base?  You can sell it at a loss or wait until it goes back up in price (if you do not have any other money to add to it), or either take some cash that you have waiting to invest or take a profit from a stock you have made money on and add it to your loser stock and you will automatically crystallize some of your losses by averaging your cost base down.  You also might be able to offset any capital gain with a capital loss and save on the taxation of your capital gain.

  You can also do the same for averaging up by selling your profit you made off of your principal and buying it right back. This will increase your book value/average cost base (principal) and turn those paper profits into a solid gain.

  To find out how much money you have made or lost on a stock (market value), just times your amount of shares held by how much your stock has gone up or down in price from your cost base.  To figure out how much percentage you have made or lost, just divide the price change in your stock by the price from where it moved.

Something you should remember is that when a price of a stock goes down, your money can buy more shares, but as the price goes up, that same amount of money buys fewer shares; this is known as dollar cost averaging and effects your average cost base.
 
 

  Things to watch for
 

  Watch for currency fluctuations if you are investing outside your country.  Say the US dollar is worth $1.50 CDN, this would mean the CDN dollar is .67 cents US ($1CDN divided by $1.5 US, or vice-versa).  You want to buy into another country when your dollar is at its strongest and sell back into your currency when it is at its weakest.  This will give you a profit on the currency fluctuation along with a profit you made by investing in that country, hoping you made a profit.

  Watch a company’s fundamentals, which include management, revenues, profits, cash flow etc.  If a company’s fundamentals start to deteriorate, analysts will not hesitate to downgrade the company.  Analysts can be a real pain sometimes by one week downgrading a stock, then a month later upgrading it with all investors following them in their foot tracks.  You have to watch analysts, go with the best-known ones.

  Keep away from stocks that continually test their 52-week lows and add to stocks that consistently keep close to their 52- week high.  Too many people average down when they should be averaging up.  Also watch the advance/decline ratio of stocks too see which way the market is going as a whole.

  You should also keep an eye out for overall stocks and markets openings and closings.  Stocks and markets that continuously open weak and close strong, is a good sign of investor sentiment and a solid bull market.
 
 

  Equity Mutual Funds: A Passive Alternative to Stocks
 

  Equity Mutual Funds are an open-end investment with a continuous distribution of shares that is managed by an investment company that pools investor’s money to buy stocks for a furnished fee of course ranging from 1% to 5%, which would be the management fee.  This is included in the management expense ratio.
 The management expense ratio is the total expenses of the fund rounded up into a fee charged by the funds managers.  A professional manager or managers buy and sell stocks on behalf of investors.  But remember this, if a mutual fund manager or managers charge you a 2% management expense ratio to manage the fund, that’s 2% less you will make on your money.  This percentage is taken off before your return is published.

  Equity mutual funds are growing immensely popular.  Equity mutual funds hold a basket of stocks anywhere from 20 - 200, depending on the mutual funds objective.  There are diversified mutual funds which are funds that are invested in a broad array of industries and stocks while sector funds focus on a specific industry (i.e. technology) with only a small holding of stocks.

  Mutual funds are either domestic or foreign, with foreign funds sometimes being considered a hedge against holdings of a domestic fund being that not all world economies or currencies fair well all at the same time.  This would be considered good correlation.  Having money invested into domestic and foreign funds is good diversification and hedge.  The same goes for stocks, being that holding domestic and foreign stocks is good diversification and hedge.  Some sheltered plans that shelter your money from the taxman limit you to how much money you can have invested in foreign economies.  Future contracts are sometimes used to get around this issue within mutual funds.
Remember this when buying a mutual fund that invests in another country and that does not hedge against currency fluctuation, that any gain or loss on your countries currency, will have an effect on the return of your mutual fund. For example, if you buy a fund that invests in the USA and it is bought in US funds and your currency appreciates against the US dollar over that time frame, you funds return will be lower, than if the fund hedged against currency fluctuations.

  There are many different types of mutual funds that buy stocks.  One mutual fund may buy technology stocks, which would be considered a sector technology fund, or a mutual fund may be invested in stocks that pay high dividends (high yielding) which might be utility companies would be considered a dividend fund.  Mutual funds that invest in both bonds and stocks and allocate the funds holdings based on what the fund manager or team think are going to best going forward would be a balanced fund. With a fund holding much more bonds or stocks, this would be called an asset allocation fund with no restrictions on how much money should be invested in bonds or stocks.
There are also index mutual funds, which are fully invested and passively managed to match or beat the index it is tracking.

  Equity Mutual funds are good for people that want a hand in the stock market, but do not have the investing knowledge when it comes to the stock market or just don’t want to be bothered following the stock market.  They just park their money in a mutual fund, IPU (index participation units traded on a stock exchange) or exchange traded funds that are closed-end mutual funds (fixed amount of shares).

  As for stocks, the same goes for mutual funds.  When it comes to sheltered or non-sheltered plans, most can be both held inside or outside a sheltered plan, but any capital gains/losses or dividends are taxed differently if held outside sheltered plans. Capital gains and dividends are taxed equal to interest income, which is 100% taxable at your marginal tax rate, when the are held within a sheltered plan and withdrawn out. When you sell your securities at a profit outside a sheltered plan, your capital gain could be subject to 50% tax, meaning you have to claim 50% of any capital gains on your income tax at your marginal tax bracket and it also cripples your compound return if you do not re-invest your profits. Dividends are also taxed differently outside a sheltered plan based on a formula and should also be re-invested to receive compund interest.

  Capital losses can sometimes be carried forward to the future to offset capital gains in another investment. Your capital gain will be decreased which would erase your capital loss and lower the tax on your capital gain, but only if you money is not in a sheltered plan.

  Mutual funds must be researched just like stocks, but must be watched carefully for fund managers jumping ship to go to another Fund Company.  Mutual fund managers sometimes leave a good running mutual fund to go to another mutual fund company to be paid more for their expertise.
 Mutual funds have star ratings being that 1 star is the worst to 5 stars being the best.  There are companies that rate a funds performance against other funds performance in their class to come up with a star rating.  Five star funds that carry a consistent 5 star rating are few and far between, but they are out there.

  Success in the past does not mean great future performance. When investing in mutual funds, it’s a long-term approach unless you’re into sector funds, which is the next best thing to owning a hand full of stocks.

   Mutual funds can be bought through plans where you buy at certain periods of time or just a lump sum payment whenever you feel like investing.  What you must watch for are the one time fees that are charged to you upon the purchase of a fund (front-end load fund,ie 1-5% fee, but with a usually lower MER ratio compared to a back end load fund with a declining fee structure 5-1%, depending on how long you stay invested in the fund, but with a usually lower MER ratio than a no load fund).

  There are many Mutual Fund companies and many underperform the index they are matched against, but there are a select few that can beat the index they are matched against and sometimes.  Sometimes they can be a sector fund or just a well run diversified fund. Did you know that on average, 80% of mutual funds managers cannot consistently match or beat the average stock market indexs they are using as a benchmark!

 One quick thing to remember about mutual fund advertising is that the best-run companies don’t always need to advertise.  They let word of mouth and their returns do the talking for them.
 
 

  Index Mutual Funds
 

  If stocks or higher risk mutual funds are not your cup of tea and you like to sleep at night, then index mutual funds maybe for you.  Index mutual funds (mutual funds that hold the exact same stocks that are in the certain index that they are intended to match or beat, i.e. S&P500) will not quite match what the index they are trying to following over time because you have to pay a fee for the manager to run the fund, roughly around .50-1%.  Therefore, if the market that the mutual fund copies returns 10% for the year, the mutual fund will only return 9% (if the fee is 1%).  Now, 1% a year for 10 years is 10% that the mutual fund will under perform the market (over 10 years). That’s 10% you missed out on being compounded on your money.

  There is an alternative to index mutual funds, webs or spiders that are traded on the AMEX (American Stock Exchange), or tips or hips (IPU) which are traded on the TSX (Toronto Stock Exchange).  These do the same thing as index mutual funds; but are traded (bought or sold) on a stock exchange, the same way as a stock is.

  Index linked Term deposits are an alternative to index mutual funds and so are exchange traded funds.  The term deposit is based on the return of a certain stock market index while your initial investment is guaranteed.  The catch being that you are capped on how much interest you can make and you usually must locked in your money at least 2 years or more. The exchange traded fund would be bought and sold like a stock listed on an exchange.
 
 

  Where and how to buy stocks and mutual funds
 

  You can buy stocks though a Stock Broker, sometimes a Financial Planner, or even online through a Discount Brokerage.  These are the main ways to get your hands on stocks to purchase or sell, along with many other investments available.  You must now decide how you want to purchase or sell stocks.  Full service brokers or financial planner; will help make your investment decisions and trades for you.  Through a discount brokerage you’re doing all of the research and trades your self with a much lower fee’s.

  Whatever you decide to do, always compare fee structures from company to company and see which company offers the best deal.  Not always is the lowest price the best. Remember that you get what you pay for, but there are some companies that offer low fees and good research tools.

  For mutual funds you want to figure out whether you want to buy in lump sums or at periodic intervals (dollar cost averaging).  With dollar cost averaging, you buy more shares when the price is down and less when the price goes up.  In the long run, your cost base could be lower than if purchasing in a lump sum.
 There are also other ways to buy or sell stocks or mutual funds, that’s by having a margin account (borrowed money) with your stockbroker for a fee.  You could also get a loan from the bank, but I wouldn’t recommend either one.
 
 

  Quality not Quantity
 

  First there is quality and second there is quantity.  It is all up to you where you want to finish either first or second.   Finding a high quality stock with very strong earnings compared to their competition in their industry and of course, the overall market.

  It is all about earnings, supply and demand in the end.  Whether it’s for technology, financial services or oil.  If demand outstrips supply by a large margin, research the company that has a strangle hold on that industry and that also has great earnings.

 In a perfect world, I always look for a company that has an earnings projection of 30% or more with a huge niche or market share in their respective industry or sector.  They are out there, but you really have to do your research and never settle for second best!  It only takes a few great standout companies in your portfolio, over a period of time that will make you wealthy, rather than holding a dozen mediocre stocks.
 
 

  The Bond Market
 

  The Bond Market consists of mostly short or medium to long-term bonds. The 30-year long-term bond used to be the bell-weather indicator.  The 10-year bond is now looked at as the bell-weather indicator instead of the 30-year bond. The bond market is located in Chicago.

  Myself, I wouldn’t buy bonds.  Why finance someone else’s debt.  Finance your own debt.  Besides, bonds don’t outpace inflation in the long term like stocks do, unless you are buying real return bonds.  Even still, you won’t make as much as you can with the stock market over the long haul.

  Many Wall Street gurus watch the inevitable yield curve and follow the bond market. They are always wondering which way the curve is going to go next and by how many thirty seconds (points).  The consensus on the bond yield is if it goes above 6%, its not good.  Bonds are the opposite compared to stocks being that when the yield curve goes down (in percentage terms) the actual price of the bond (in thirty seconds, 1/32,2/32,etc.) goes up.

  Bonds are very sensitive to interest rate fluctuations.  The bond market watches very closely to which way the interest rates are going, either up or down and it works into the bond price and yield curve.  Bonds are so sensitive to interest rates because bonds are interest bearing, so if the 10- year US long bond yield is going down (in percentage terms), you are actually making money because the price of the bond is going up and vice-versa if the bond yield is going up.  It’s good to buy bonds at the top of the yield curve (i.e. 6.25%) and sell at the bottom of the yield curve (i.e. 4.25%).
An Inverted yield curve is when long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is  used to be a predictor of economic recession. This could be a situation where interest rates have been rising instead of going down and inflation is rearing it's ugly head.

  Most times, the stock markets follow the bond market to get a glimpse of which way interest rates are headed because the bond market is a good indicator of which way interest rates are going, either up or down, so stocks can work interest rate fluctuations into their production costs and for investors to decide what sector to invest in next.

  Like the stock market, the bond market looks into the future, usually 6 months or more and factor in how inflation and interest rates will affect their price.  The same goes for the Federal Reserve. They look into the future and try to see where interest rates should be to ward off inflation and to extend the economy expansion or recovery.

  There are many different types of bonds.  The main difference to remember is that a bond is backed by an asset; a debenture is backed by good faith.  Most bonds are debentures.
There are corporate bonds to government bonds with corporate bonds yielding higher than government bonds because corporate bonds are considered more risky and government bonds more safe, but with less interest to be made.  Bonds are also rated. For a government bond, it might be an A-plus to a not so safe corporate bond C minus.  With bonds, you are lending your money to a company or government with the promise of interest paid back to you on your principal.  Bonds just don’t compare to owning stocks.  At least when you invest in a stock, you are giving money to a company to grow and receive capital gains (which are taxed more friendly than interest), compared to financing a company’s debt and receiving interest, which can be fully taxable at your marginal tax rate..

  There is also the Money Market, which consists of short- term debt from 30 days to one year.  Some Money Market instruments would be short- term government bonds, treasury bills, commercial paper and banker acceptances.  Short-term debt is usually of high-grade quality and is backed up by high quality corporations, government or treasury department.

  The Money Market is usually a parking place for investors when the stock market or bond market is on shaky ground.  Some short-term debt sometimes have a high purchase price with minimums of  $100,000 or more.  My recommendation would be to purchase a money market mutual fund if you are looking to park your money for a while.
 
 

  Be Your Own Broker
 

   This is a true story you are about to read.  A little while back I had a job interview at a stock brokerage firm.  I knew someone that knew someone that was the hiring manager at a highly respected stock brokerage firm. This is how I got the job interview to begin with.  I was so excited, while also being nervous at this interview.  I was thinking to myself, “what an opportunity to be actually interviewed“. The only thing that could make it better is to get hired.

  Well, as the interview went on, I was less interested in working for this securities firm, while the interviewer was more and more interested in me to work at his firm. So you say, what was wrong than?

  Well, just like you and everyone else in this world, who wants to pay 3-5% commission fees on trades and transactions and pay trailer fees on mutual funds? I know I don’t.  I trade through a discount broker, while preaching to you in this book to do this also.  So, why would I want to sell stocks/mutual funds and charge a ridiculous fee to my clients, when this is the one thing I hate the most being done to me?  I was thinking, what in the world do I do now? This guy wants me to take an investment course and then work for him after I have completed it.  Any normal person would say all right I’m in but no, I have to be that person that does not go against his own beliefs.  Be a realist and say to myself, “no, I don’t want to work as a stockbroker and charge commissions and account fees to my clients, when they can go somewhere else cheaper”.  It would just go totally against what I believe in.

  I continued working at my low paying job while making some really good money trading online through a discount broker for a bare minimum fee and smiling all the way to the bank. Oh and also working for banks, making a decent salary and educating clients on what investments they should buy.

 The moral of the story is, don’t be scared to be your own broker and do your own research and trades.  You’d be surprised to what you can accomplish on your own and for cheaper fees than what a full service broker will charge you.

  For research there are thousands of websites that give you tons of information on the stock market and the stocks that are within it.  The company that you trade through will let you have access to most of the information they have on stocks right at your fingertips.  So, there is no reason that you can’t trade on your own and save some money on fees. 

  If you must go to a full service broker, go to a couple of different brokerage houses and get their fee structure and resources and compare them.  Go with the one that gives you the best bang for your buck.

  Also, if you do go with a full service broker never let your broker forget that it is your money.  Sometimes stockbrokers and financial planners play with your money as if it was theirs.  Frequently trading your money, so that they can charge you more commissions.  Right from the start, you want to tell your broker that you do not want them to be trading your account a lot.  Pick the investments that suits your particular needs and objectives and if they must make a trade, they must consult with you first before doing so.  If they don’t like that, then go somewhere else.
 
 

  Money is the opium of the rich; people can never have enough
 

  Money equals greed, the death of a bull market.  Too much froth is a sure sign of a market top.  Too many people get greedy when it comes to investing and making a lot of money in stocks.  The sooner people realize that stocks and the stock market don’t go up in a vertical line and have to let earnings catch up with the price of the stock, the better.  Just remember this “Two steps forward one step back” and you will never be too bullish.  It’s always good to have some bears in the camp to keep the bulls honest and vice-versa.  If the bulls are 60% or more you should keep an eye out for a pullback in the near future and a breakout range if the bears are 60% or more.  If there are a lot of neutrals (not knowing which way the market is going) the market or stock may trade sideways (resistance) for a while.  Theses are just my opinions; you can form your own using common sense and reality like I do and not getting caught up in the hype.  Go your own way when everyone else is going the same way.  By doing this, you could become an investor that can rise above the rest.
 
 

  The Internet: how it is and how it will affect you and the stock market
 

  The Internet, which is referred to as “The Information Highway” is a world without boundaries.  The World Wide Web harnesses the Internet to bring you millions of web sites from people trying to sell you something to you to paying your bills.  I like to think of the Internet as one big library with endless information.  I guess you can look at the Internet as one stop shopping.
The Internet is a great place to search for information on the stock market.  There are many web sites containing information and research for investing in the stock market, for instance, earnings of a company, ratios and return on equity.

  Companies usually have their own web site so you can search for information on that particular company, that way you know the information is true and factual.  Some even post their annual reports and company information for investor relations.  There are even websites built for you to search for information on a certain stock, from net income to the number of shares outstanding.

  The Internet is even changing what stocks we invest in because the Internet has created new companies like your typical .COM Company to an infrastructure company that is making the components that makes the Internet work.
  The Internet lets you also be able to trade stocks online.  The Internet is creating a whole new economy with new technology companies being created everyday, that makes our life easier and faster, including e-commerce, e-business.  You cannot fight the Internet; you might as well embrace it and reap the rewards of it.  It might just make you rich!
 
 

  The Small Investor: One Powerful Force To Be Reckoned With
 

  Once upon a time there was the full service broker and that’s all.  You had to go by their advice and pay those ridiculous commissions for some, sometimes not so great investment advice.  Well  those days are long gone and we retail investors have changed and will continue to change, the stock brokerage universe as we know it.  We now have just as much information on investments as the everyday stockbroker and analysts do and we can trade for as little as $5 a trade instead of  $200 and up!

  We are beating full service brokers at their own game.  We are making them come down to our level, instead of us looking up to their level.  We have made them lower commissions and account fees, open access to most of their research facilities and made them offer discount brokerage firms for do it yourself investors.  The used to be novice individual investor has become a savvy powerhouse that is and will to continue to beat the average stock market index and professional institutions by a wide margin.
 
 

  Don’t Fight the Tape
 

  Never fight the ticker tape, it is pointless.  Good volume on the upside with a plus tick and lower volume on the downside is good.   A good company will have good resistance most times on the downside and really good pop on the upside.  Earnings or news on the company usually causes large volume swings, whether good or bad.

  A stock that is one of the last to fall on a down market and the first to go up in an up market is a stock to really watch for, it could be a winner.  Take any dips on a stock like this as a buying opportunity and add to it on the way up also locking in your gains, as long as the fundamentals are still there.
 
 

  A Sheltered or Non-Sheltered Portfolio
 

  The main difference between a sheltered plan and a non-sheltered is that your money compounds tax free within a sheltered plan, meaning that you money that you make within your sheltered plan is not subject to tax until you withdraw money from your sheltered plan).  In Canada, you can contribute to your RRSP (registered retirement savings plan) and deduct it off your yearly income when it comes time for income tax season. In the U.S., it’s an IRA.

  You can also transfer money in a way which the investment world calls “in kind”, which means transferring your money that you have invested in a certain investment vehicle and transfer it to another plan or institution without having to sell your investments, then having to repurchase them.  Some institutions will charge you a fee to transfer your money in kind and some will not.

  In the end as always, the government gets you with their taxes.  Yes, they let you grow your money tax free inside a sheltered plan, but they will tax you fully at your marginal tax rate when you withdraw your money for an emergency or retirement.  So, it is very important to leave your money in your sheltered plan until you retire and you are being taxed at the lowest marginal tax rate as possible.  All money made within a sheltered plan, is fully taxable upon redemption, even if it is capital gains!

  Myself, I would have some money inside a sheltered plan and some outside a sheltered plan, but you should remember that you will be taxed on any capital gains, interest and dividends that you realize outside a sheltered plan.

  Currently in Canada, interest is fully taxable; capital gains are 50% taxable and corporate dividends are taxed based on a formula.  Dividends used to be the better choice than capital gains when you had a substantial amount of money, but as usual the government is always changing the rules and made the dividend tax credit not so attractive compared to capital gains.

 To sum it all up, hold your interest bearing investments inside your sheltered plan and your capital gains and dividends outside your sheltered plan.
 
 

  The Next Big Thing
 

  Look for the next big revolution, whether it is the Internet, digital or wireless.  You cannot invest in the past you must invest in the future; meaning you must embrace the next big thing when everyone is still buying up latest big thing.

  Great ideas and inventions come and go, just don’t be the last one on board of the next big thing.  You have to have guts when you are investing in the next big thing, when everyone else is telling you are crazy while they’re still investing in the latest big thing.  You have to have an open mind and go your own way, get on the ground floor level of an up and coming company or idea and watch it closely.  Just when the company that you are investing in finally gets recognized and everyone and there dog is buying it, it’s time for you to start thinking of selling it or at least take some big profits and go look for the next big thing again.

  Just when a company thinks they’re on top of the world and that there impenetrable, there is a company right here with heals ready to take their place as the king.  You always have to keep up with the times and so should your investments.
 
 

  The New Economy vs the Old Economy
 

  The new economy consists more of technology companies that ramp up production, while lowering inflation; rather than the old economy, which consists of your manufacturing steel, more commodities based economy, which is an inflation accident waiting to happen.  I will never knock the old economy because without the old economy you would not have the new economy.  Someday the new economy will be considered the old economy and will also be replaced with newer cost efficient companies which comes to the point that you always have to keep an eye out for new developments and ideas, because the markets and the economy will move with or without you.  New inventions, cures, ideas and revolutions, will always keep coming as long as time keeps going forward.  You just have to try to look into the future and see where the world economy is going.  As I write this book, there is a wireless revolution going on the Internet is going wireless breaking old companies down and making them rebuild their company around the Internet.
 
 

  Market Limit Stop or Stop-Limit Orders
 

  These are the types of orders you will execute when you make a stock trade.  Whether it is a market order, which is an order where you to instruct the broker to buy or sell at the current bid or ask price, but could fluctuate based on how volatile the security you are buying or selling.  You can also set a limit order, which is when you want to buy or to sell at a certain specific price, in which you choose.  Your order will not be executed until the certain price you chose is traded at.  There is also a stop or stop-limit order.  A stop order is when you want to sell a stock at a lower price (at market) to protect your principal or some sort of profit.  Put it this way, say you bought a stock at $10 and you don’t want to keep it if it drops below $8, then you put a stop order on your stock at $8, so if it ever goes that low your order will kick in at $8 (but only when the stock actually trades at that price) and the broker will route your order to the open market to sell it at “market,”. Remember, price fluctuation in the price may occur.

  A stop- limit order is a combination of a limit and a stop order.  First, you set a price you want to sell your stock at.  Let’s say $8 as I said earlier, but the difference in this scenario is that you set a limit price in which you want to sell this stock instead of just getting the best possible “market” price.
 
 

  Stock Market TV News
 

  Once living in Ontario, Canada I turned on my TV and start changing the channels noticing that there were a few different stations available that were not available in the last place I lived.  So I start to flick through the channels and to my surprise, I come across a station that has a stock market ticker tape running at the bottom of the TV screen.  This TV show also has people reporting stock market news with amazing accuracy.  This was the greatest stock market reporting news I have ever come across.  I learned a lot from that station as well as reading investment books and newspapers.

  If you have a channel like this, watch it, you might learn something, but take some things with a grain of salt.
 
 

  Buy in November Sell in May
 

  Simple, buy in November sell in May.  Stocks usually have a bad October, but not always. November is usually a good month to buy up those stocks that did not deserve being sold off or companies that reported good earnings.

  Sometimes, companies pre-announce earnings shortfalls before their coming quarter earnings dates, saying that they will not meet analyst’s earnings expectations for the current or coming quarters ahead.  Earnings short falls usually are pre-announced 1-2 weeks before the companies expected earnings reporting date. The second and third quarter seems to be the worst, most times for earnings short falls. Usually because of slow summer sales etc. inventory creeps higher, meaning that demand is less than supply to much inventory crimps corporate profits which in return, hurts a company’s bottom-line.

  Many Mutual Fund companies do a lot of tax loss selling in the month of October because most Mutual Fund Company’s fiscal year end is in October.  They are out to sell there stocks that they are loosing on and adding to the ones they are making money on, which is called “window dressing” their portfolio.
 
 

  Buy High Sell Low?
 

  What? Buy High Sell Low?  What is up with that, you say?  Well, anyone that has ever invested in stocks has done it at least once, including me!  It is so easy to get caught up in the hype of a bull market, it has happened to everyone, so don’t feel bad if it has happened to you.  Just try not to make the same mistake twice.  Buy low, sell high, is what we are told to do by the professionals, but they themselves sometimes do not practice what they preach.

  The best advice I can give you is to set buy and sell points for your stocks or mutual funds and follow through if and when they reach your sell or buy point.  When you follow a certain stock and you think it is to high in price, you are probably right.  If you think a certain stock is undervalued, you are also probably right.

  It is also important to get in on a stock before the institutional investors(ie pension funds) do, then while they are buying up a certain stock in a big way, you laughing all the way to the bank.  This could also be a good time to sell before they do.
 
 

  What Goes Up Must Come Down
 

  Date: April/2000, the end of the longest bull market in U.S. history which was also followed by one the the longest bear markets.  The stock market can make you or break you.

  Well, the market made me some money.  I cashed some of it in, but I also lost some on the way down, just another time to learn from your mistakes.  Little did I know that the bottom was going to fall out of the market for the rest of 2000 and most of the decade that followed. That was a very painful thing to watch.

  The lesson here is to remember that stock market advances are followed by market declines.  Easier said then done, I know, but we small investors learned the hard way and received a reality check for the year 2000 and for the rest of the decade. What goes up must come down! But remember this, two steps forward one step back, use common sense, invest for the long-term, dollar cost average, earnings and you will do just fine.
 
 
 
 
 

Mark John Thorpe