Rule #1 Finance Blog
For those of you managing your funds with long-term tools:
I'm using Rule #1 charting on our Mutual Funds because we are not allowed to transfer our 401k to a self-directed IRA unless we quit our jobs. My question is, what do you do when the indicators still say buy but you are watching the markets falling? This is very confusing and has happened several times over the last 2 months. Please help me understand.
I'd say you are using the wrong indicators if the markets are falling and what you are seeing for your mutual fund says to buy it. To use the indicators properly for mutual funds you have to slow down the data input to mutual fund speed.
Many of you write in asking how to roll over your retirement plans. Here's a question from Kay:
I am a nurse at a local hospital with a 401K and a 403B plan. I have a 14% payroll deduction every two weeks. The funds are managed by Fidelity. I have yet to see a 10% return. I have given myself 6mo to become a real rule #1 investor.
I have a paper account at MSN and am making money! When I get the guts to jump in what is the best strategy to get my $130,000.00 out of Fidelity and into the stocks I pick.
From the Comments under the YHOO post:
Question Phil. (And thanks for answering the email I sent to you.) QUOTE: "Still, as you pointed out, it would be very difficult to predict that YHOO is going to be around for sure in 20 years."
How did we know this early in GE or IBM's lief [sic] that they were going to be around 20 years? How do we know Whole Foods is going to be around. I think with any company there is a bit of speculation don't you think?
Do we have to wait for a comapny [sic] to be around 20 years to know that it is a good company to invest in?
Here's what I told him:
Excellent question: How can we know that a business will be around in twenty years?
It's all about the first three Ms. And in this case it's most particularly about the Moat.
Several readers (among them, Yolanda from California) have written in with the following question: Could you suggest a book or website to find mutual fund tools like you have taught us for stocks i.e. MACD, Stochastics, Moving Average, etc. Or do these tools work the same for mutual funds? I mentioned this briefly in the Read more.
Phil Town got this email from Clif a few days ago and decided to post about it, since this question comes up pretty often: "Am I too old to get started investing with Rule #1?" Below is the letter [edited for length] and my response.
please, if you read this personally, i sincerely request your advice asap. i am 71 yrs old, i am single, i raised 4 children almost entirely by myself. i am a retired teacher college and senior advanced course high school – all 4 of my children have been to college. they all have jobs making more money than i ever did as a teacher, i did not save much- raising my little girl and getting her into college occupiued my 50's and 60's.
i dreamed of a useful and rewarding retirement which brings me to the ad i saw in the ny times last week for your "rule #1" book – i immediately went to borders and purhased it and read it and had -for a while a new hope that i might yet salvage a few years of the kind of retirement i dreamed of.
People often write in to ask me specifically how to free up funds to invest. I’m sure a lot of you have Eric’s question, below, about life insurance. Read on:
1. I currently have a whole life policy into which I pay $250 per month. Would it be smarter for me to invest the $250/month in following the program you set before us during the "Get Motivated!" seminar? I could pick up inexpensive term life to replace it for about $120 per year and invest an additional $3000 per year. I do have $3000 invested in the policy at this point (1 year) to consider – what would you do?
2. I started putting about $200-$500 per month into a normal money market account four months ago just to have it set aside for a rainy day. You seemed to be in favor of putting all eggs into one basket – do I close my safety account and start sending that money to Scottrade?
3. I have an IRA in worth about $15K. Would I be smarter to take the penalty for early withdrawal in order to have it available to invest using the Success Investor’s Toolbox in the manner you described during the seminar?
Any advice is greatly appreciated.
Here’s what I think:
BusinessWeek recently pointed out that the major stumbling block in the President’s attempt to privatize a part of Social Security is that Americans across the political spectrum are afraid to take responsibility for investing their own money. They want the government to keep its guarantees in place … even if the rate of return on Social Security is only 2%.