Thanks for stopping by the only investing website on the 'net designed by working folks for working folks. As more and more companies dump their old guaranteed pension plans and move their employees into 401(k) retirement plans, it's more important now than ever to learn how to manage your own investments. Come on in and get started!
We'll show you how to get a better understanding of the markets and become a confident, competent investor. And we lay it all out for you in plain English (well, a Southern variety of English, anyway). Hey, you work hard for your money - learn how to make your money work hard for you!
Trend Following vs. the 'Herd Mentality'
Those of us who use a trend following method for investing our 401(k)s or IRAs sure get fussed at a lot. That’s right: there are a bunch of market gurus out there who constantly advise, “Don’t follow the herd!” They would have us believe that buying into a stock or a fund just because everyone else is ‘piling in’ is a bad investment strategy. Well, hold your horses…
It’s true that there are times when the ‘herd mentality’ can cost investors:
> It happens most often when they are looking to buy individual stocks or low volume ETFs (both of which we discourage, by the way!). Investors will all pile into a ‘hot’ investment - usually too late in the cycle - only to see it collapse under its own weight.
> We sometimes see large groups of investors who have ‘been on the sidelines’ finally join in and start buying into an aging bull market, only to see their bottom lines get crushed by the next (inevitable) bear market.
> Following the herd doesn’t just hurt buyers - it can hurt sellers, too! During the mad rush to get out of the market at the end of 2008 and early 2009, investors who joined that crowd sold at the absolute worst time!
So, yes, following the herd (unless it’s Colin Cowherd!) can sometimes be a bad financial move. However, for us chart-savvy trend followers, going with the ‘herd mentality’ is what makes us the most moolah. Here’s why:
- The stock market goes up for one reason and one reason alone: when there are more buyers than sellers. Period. End of story.
- The stock funds in our 401(k)s or IRAs only make money when the stock market is trending up. Period. End of story.
That tells us we’d better be following the herd - during bull markets - if we expect to boost our bottom lines!
How can we tell when to follow the herd and when to back off? There’s no quicker, easier way to tell than by looking at our long term charts. The charts can tell us not only what the current market trend is, but also how strong that trend is and how long it’s been in place. They also let us know when a current trend may be changing. If we track major market trends with our charts, then we’ll know when to follow the herd and when to back off.
Keeping our portfolios ‘in line’ with the major market trends is job #1 for us trend followers. If that lumps us in with the ‘herd mentality’ - as the gurus claim - so be it. We may be following the herd, but at least we’re not blindly following the herd!
NEWS YOU CAN USE
"Vanguard, Facing Whistle-Blower Cases,
Agrees to Pay Texas Taxes"
"Hedge Funds Drained Billions from State Pension Plans" from philly.com
"How a 401(k) Works After Retirement"
"Top Portfolio Products: Calvert Adds Funds;
ValueLine Adds Shares"
"iShares Slashes 'Core' ETF Fees"
VIEWS YOU CAN USE
"7 Ways Millennials are Getting Retirement Saving Wrong" from The Fiscal Times
"Should You Invest in Stocks, ETFs or Mutual Funds?"
from The Christian Science Monitor
"Mutual Funds vs. Exchange Traded Funds"
from Money Digest
"The Ease of Index Funds Comes with Risk"
from The New York Times
"6 Things You Need to Know About Investing in Funds"
from This is Money
Autumn Reading List
Summertime's done and gone, but our need for learning never ends. Get a jump on fall with our Autumn Reading List!
These 3 books will get you through what we think is the best season of the year!! >>>>>>>>>>>>>
<<<<<<<< Clicking on these book images takes you to Amazon.com via our affiliate link. You won't pay a penny more for what you buy, but we do get a little moolah for sending you there - and that helps us cover the costs of keeping our website running free!
Here are a couple of very simple retirement calculators courtesy of our friends over at Calculator Pro.
Here are the figures we used:
> Required Annual Income: we put in what we're making now (we don't buy into that "plan to spend 70% of your working income in retirement" idea!)
> Years until Retirement: we shot for age 65, but who really knows, right?
> Years after Retirement: we sure hope to have 20 good years of doing what we want to do!
> Annual Inflation: we used 3.5% (maybe go a tad higher to be safe?)
> Annual Return on Balance: we used 7% (maybe go a tad lower to be safe?)