Stock Market Indicators: Profiting Now from the Two Best

by Guest Editorial

Stock Market Indicators: Profiting Now from the Two Best

By Brian Hunt, Advisory Panelist, Investment U

Tuesday, January 13, 2004: Issue #304

"Brian, I've got about $5000 saved up and I think I can make some serious money in the stock market. Where should I put it?" - My neighbor in Florida.

I've spoken to my contacts on "the Street" to find the answer to my friend's question. Here's what I've learned:

A few select investors are going to make a lot of money in the stock market this year. I'm not talking about my contacts on Wall Street I'm talking about investors on Main Street, judging by their current attitude towards stocks towards stocks.

Bobbie, the clerk at the local breakfast shop, is grinning from ear to ear because shares in her favorite tech stock are selling for around $30. Of course, she bought in at $80. But she's up dramatically from the low of $10.

And she knows that stocks are "coming back." It's just indicative of the optimism investors are feeling about the markets right now. And I'm about to tell you how I think this kind of optimism could lead you to some great stock returns this year - according to the two best stock market indicators out there.

The Hubbub Just Might Be Warranted on Some Level

People are making money in tech stocks again. And dreams of turning a few thousand dollars into a few hundred thousand have become commonplace with investors in the past few months.

Day trading books have returned to the coveted "eye-level" shelf in the local bookstore.

Seeing all this good cheer towards stocks (and the market's high valuation) reminds me of late 1999 and early 2000 right before stocks tanked and erased trillions of dollars of investor wealth.

With these signs of a stock market peak, should a new investor even consider buying high-priced stocks?

Let's find out.

Despite the bad signs mentioned above, I say take the $5000 and get in the game and buy.

I can't forecast if stocks will rise or fall no one can. But two of the best stock market indicators out there are telling me the chances of making money in the stock market are pretty good.

Buying Stocks Using These Indicators: A Can't-Lose Situation

I didn't listen to mom's warning to stay away from a hot stove top. I had to reach up and burn my fingers to convince me it wasn't a good idea. The same principle applies to the stock market.

I learned more from losing a pile of cash in 2000 than I have from any book or newsletter. In fact, losing money is probably the best thing that happened to me and to anyone else starting out in the markets. It teaches you the best lesson in investing. That lesson?

Losing money is not fun. Therefore, your # 1 investment goal should be to not lose money. After you figure that out, then you can go for the big 100% returns. Using the two stock market indicators I mentioned can help you do just that. If you're fired up to put the money you've saved to work in the stock market, go ahead and do it. But start small. If you've got $5,000 saved up and you've never bought a stock before, take a couple thousand and jump in.

Learn how things work. Learn how to use trailing stops.But don't risk any more money than you can afford to lose.

Think of it like golf lessons. You can read golf books and take a few lessons, but the real learning comes from getting on a golf course and swinging the clubs.

My advice to a stock market beginner is to get out there and buy. If you make a few mistakes, go back to the IU archives to learn how you could have done a little better. Even if this market rally ends and you lose a few bucks, you'll learn the most valuable investment lesson out there. That's worth a lot. But you can't get rich in the stock market unless you're in it.

Good investing,

Brian

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