By 
You must ignore the TV, radio, newspaper and all other TALKING HEADS analysts when it comes to investing!
What actions are they talking about? – The same group as always, every day of each year – Why? Since they don’t know any better, they are sheep like the general public, repeating what every economic textbook says and every other economist tells them to say. Every day, the same companies are featured on the evening news:
WHY?
They are not going anywhere. Some of the stocks that make nightly headlines were market leaders 20 years ago. New cycles bring new leaders; this has been proven year after year. Many of these TALKING HEADS scream about “buy and hold”, but what do they really have? They have old high-fliers that were superstars, but have now become fallen stars that are 20%, 50%, or even 90% off their all-time highs (some may have given you a small return: 10% or less in the past 5 years – WOW – GREAT OPPORTUNITY!). Yes, maybe after 15 or 20 years, you will get your money back, but what is the point? Many of these “so-called” investors tell you how they own the XYZ stock and have returned 65% to them, BUT they leave out the key factor that it has taken them 16 years to get to that point.
One of the strongest and most promising stocks of the early 1900s (1920s) was RCA; This action was one that people claimed they put in their wallet and held until near death; It will NEVER fall and if it does, hold on because it will come back. Well, let’s take a look: RCA skyrocketed over 1100% during the 1920s and crashed with the rest of the market in the early 1930s. It went from a low of $ 8.70 to a high of $ 106 to a decline level of $ 3.00. Some said hold on, others said buy at every drop. – Guess what, it didn’t go back up to pre-crash levels until 1963! 30 years to break even for some. Maybe that stock in your portfolio is yesterday’s RCA; History always repeats itself because human nature is always the same!
Stocks are worth being held for long periods of time, this is a proven fact, but NEVER save a stock when you are flashing the SELL signals left and right (especially if everyone on TV tells you to buy now in the fall , “it’s a bargain”). These talking heads said this about all the actions on your computer screen in 2000 and 2001: “buy the drop.” The only dip was the guy on the TV and all the idiots watching him. I don’t want to offend anyone, but you need to take control of your investment life, you need to know why stocks are going up, why they are going down and that NO STOCK is immune to a bear market like the one we just had.
Market leaders now will not be leaders in the future; on some rare occasions, a stock here or there will challenge everything and grow decade after decade, but even these stocks end their incredible rise at some point. The same goes for old leaders, they won’t lead today’s markets – they get too big and their growth slows down, preventing them from turning into great growth stocks and delivering you great returns. Now, I never said that you couldn’t own a stock like this, a lot of people are satisfied with these companies, they “feel safe”, that’s fine; everyone has different goals.
Let the market tell you what is going up or down. Look at “sister stocks”, I talk about them in our education section of the website. What do I mean by sister actions? They are shares that belong to the same industry. When an industry is strong, most of the stocks in this group will go up hand in hand. (I mean most, not all, laggards are always left behind). The fundamentals will be solid for most of the group’s actions and the technical aspects will guide you throughout the journey; Think of the technicalities as a roadmap.
Once the fundamentals have been established, check the charts, if multiple stocks from a particular group are breaking their foundations, this is a strong sign that something great is about to happen in this group. The more positive the overall market, the better the group will perform (bear markets tend to contain almost everyone). Why buy a stock that has great fundamentals in a weak group? If all other stocks in that group are acting weakly, this may tell you that the “only” bright spot in this group will eventually return to the pack, so don’t risk it. Investing is reducing risk! Don’t take a chance on a stock that looks good but the industry is suffering.
Buy the leader of a group where various actions are showing strength. Never buy the cheap stocks that have lagging performance, this is a sure way to lose money: buy the best of the bunch, the one with the best fundamentals (accelerated earnings, ROE, sales, etc.) and technical aspects (base pattern , shoots of great volume, relative strength, etc …). What may seem high to the general public; it usually turns out to be low for the savvy professional investor. I’m not talking about the “talking heads” on television: smart investors work for institutions, they move the market! When they buy, everyone knows it because the volume jumps to extreme levels or levels not seen in previous months or years. The common man does not have this power – ONLY institutions have this power – learn to understand this power, here is the smart money.
Finally, while moving this educational information into your subconscious mind, ignore the “Talking Heads” and learn to listen to the market. Price and volume will always give you the best advice.