THE BULL IS DEAD – LONG LIVE THE BEAR

            Friday the bull was not only slaughtered, but it is now going to be

cut into many parts.

            If you are one of those folks "in for the long haul" I hope you have

plenty of years because there are no more bulls in the pasture. The herd

has been led to the packing house.

            Hope and fear will now dominate for the next several years. Before

It was hope and greed. Yes, I said years as this bear market has a long,

long way to go. It will not surprise me to see the DOW now at 12,000 trade

around 6,000 in about 5 years. This is a young bear who will grow and

mature by eating almost every stock.

            What can you do with your 401K or other tax sheltered

retirement plan? Immediately transfer all funds to a money market

account. Sure you won't make much, but you won't lose it.

            The broker will try to talk you out of selling. The fund manager will

also be very unhappy. Accounts in money markets do not make any

residual payments for them. Most investors who own mutual funds do

not realize there are hidden fees that amount to about 2% every year.

            Mutual fund managers are paid by the amount of money in the

portfolio and not on the performance of the fund. Even when investors

are losing money month after month they remain fat cats.

            Brokers will tell the usual story that this is a great "opportunity"

to buy XYZ company at this price. Don't believe it. "This is a good

company and it pays a large dividend." Really? From 2000 to 2003 the

S&P500 Index lost 40%. Would the dividends you might receive make

up for such a huge loss? You can answer that one.

            History shows that during any 10-year period there has always

been a market decline of 20% to 40% and sometimes more. Index funds

are not a safe haven and 80% of mutual funds do not perform as well as

a major index. Every index fund lost money during that 3 year period

and many have not yet recovered. Cash is king.

            Recently there has been a new financial instrument created. It

is an ETF – Exchange Traded Fund. It is similar to a mutual fund, but

the expense ratio is about 1/10 that of regular mutual funds and it can

be bought and sold during trading hours. Brokers also allow stop loss

orders to be placed.

            And here is the kicker. There are bear ETFs. These are shares

that go up when the stock market goes down. There are hundreds of

them that take in the entire market including specialized sectors. These

can be found simply by a Google search using the words "bear ETF".

            Take the time to study these as this is a way you can use these

inverse funds to profit in a bear market.

            The bear is eating all stocks, even the "good" ones. Don't let

him eat yours. 

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 and receive

his market letter at no charge on www.mutualfundmagic.com to

discover why he's the man that Wall Street does not want you to know.  

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