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Stocks & Mutual Fund InformationShorting Stocks ? The Basics, Part I of IIWhat does it mean to short a stock? Shorting Stocks ? The Basics, Part II of IIAfter the publication of the first part of this two part series, I had a few questions asking if shorting stocks is legal and I will quickly reply with a big YES. Some people believe that shorting shares of American companies is not patriotic or does not seem like the right thing to do. Shorting stocks is not my primary method of making profits in the market as many of you already know, but it is a valid strategy that must be covered especially since the market has focused on red flag and shorting opportunities since December 2004. In the world of supply and demand, things go up and things go down, it?s human nature. Stocks have been shorted for over a century and have provided investors with an alternative strategy to making profits. Trading as a BusinessWhat can I expect to make my first year of trading? Bollinger Bands StrategiesThe Bollinger Band theory is designed to depict the volatility of a stock. It is quite simple, being composed of a simple moving average, and its upper and lower "bands" that are 2 standard deviations away. Standard deviations are a statistical tool used to contain the majority of movement or "deviation" around an average value. Bear in mind that when you use the Bollinger Band theory, it only works as a gauge or guide, and should be use with other indicators. Peer GroupsWhenever I see mutual fund comparisons in the trade publications and in the financial section of the newspaper they almost always mention a specific fund and tell you how good it is in relation to its peer group. A peer group is a specialized sector of mutual funds that all invest in about the same type of stocks or areas of the world or size of companies or some such categorization. Why This Bear?People are constantly asking me why is the stock market going down. What is causing this bear market? It is relatively simple so don't ask an economist. He will give you a 200-page answer that is undecipherable. Can you understand Mr. Greenspan? Kick The TiresBefore you buy another car you walk around the lot, kick the tires, slam the doors and look at the mileage indicator. That's an odometer. I know. That is about all the "research" you can do other than what the car salesman tells you and I hope you know better than to believe him. How To Buy And HoldOne of the most believed bits of conventional wisdom from Wall Street is to Buy and Hold. Any stock or mutual fund should be put away for eternity and never sold. This is total hogwash and is guaranteed to reduce your investment income. Rebalance And DiversifyThe stock market has not been very kind to your investments lately. Your broker knows this so you may have received a call from him suggesting it is time to 'rebalance and diversify' your portfolio. Social InsecurityJust about everything you have been told about Social Security is an obfuscation. That is a big word for convoluted truth or lie. Risk ControlEverything you invest in has risk so you want to do your research before you put your money on the line. Protect Your 401KChecked your 401K lately? Going back to about a year ago many of these retirement accounts have shrunk by 30%, some even more. What Happened? One Way StreetEver turn down a street, get half way and suddenly realize it is one way and you are going the wrong way? Is that the way you feel when you look at your stock brokerage statement? Top 25 Growth FundsOn Monday, November 25, 2000 Investor's Business Daily listed on page B1 the Top 25 Growth Mutual Funds for the last 36 months along with their performance for the year 2000 to date. Only four showed a profit this year of 21% and the other three had increases of 12%, 5%, and 5%. Fifteen had loss of from 10% to 28% and the other 6 were down slightly. How To Pick A Mutual FundMutual funds by definition are a mixed bag of stocks, bonds and a little cash. Their price per share is the NAV, Net Asset Value of the total amount of money in the mutual fund divided by the number of shares. They seek to be fully invested at all times.
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