If you read this blog you know I am a follower of the Financial Trends Forecaster site. In particular I watch their NYSE ROC and NASDAQ ROC charts. These charts show the annual rate of return rather than the index or price.

Financial Trends Forecaster believe the ROC is a much better gauge of market performance.

Using these charts can help us decide when is a good time to be in or out of the market.

You should read the update for the NYSE Rate of Change Chart for  7/15/2009 on the website to get an understanding of what the current market situation is.

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Today I got my copy of the FREE Monthly Financial Trend Forecaster Newsletter. I have mentioned this newsletter before and believe it is well worth subscribing to e-Trends.

The site itself has some great articles and charts on it that show what is happening to the NYSE, NASDAQ and Inflation/deflation.

The chart of the Rate of Return on the NYSE is shown here. You can click on it to get a larger picture. It has “fallen off a cliff” according to the chart. You are advised not to even consider investing in stocks until a buy signal is show on this chart.

If you are in a fund consider putting any additional money into a cash deposit account for now.

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The world is turning up-side-down. Values are being destroying  and rules of law, business and etiquette thrown aside.

In such a world the best Baby Boomers can do is try to keep themselves and their money safe until everyone realises the world is doing really stupid things.

Kitchen table economics tells you that you don’t try and get out of debt by buying more debt. Even if you have your own money printing press other people will eventually not trust the money you give them.

Suspending the rules governing mortgages got us in this mess. It was Congress that forced banks to lend money at lower interest rates to people who would not normally qualify for them.

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Here is the second book I recommend people read to educate themselves on the stock markets. “All About Market Timing” was written by Leslie N. Masonson and published in 2004, after the 2000-2003 bear market. Click in the title above to go to the Google Books site to see the contents of this great book in detail.

In the introduction Mr Masonson says of the people who got hurt in the 2000-2003 crash,

“Perhaps you followed the widely touted buy-and-hold approach. And if you are like most investors, you have no game plan for cutting your losses or taking your profits. Lacking investing strategy and blindly following the buy-and-hold approach can lead to financial ruin.”

I don’t think I need to dwell on the point in this market.

What you need to do is make sure you don’t let it happen to you again. You also need to learn how to minimize what is going on now with your portfolio. Read the rest of this entry »

Once again I have found a web site that makes complex financial data simple to understand. Doug Short’s web site does just that. Plus he has added several links to retirement web sites.

He presents much of the data in graphical form and allows you to interact with it. All the charts have brief explanations on them for key points in the charts.

His two most popular charts are “Four Bad Bear Markets” and “Bear Bottoming Process“.

The Four Bad Bears clearly show that this bear market has been the sharpest and most severe on record so far, and is not over yet.

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Right now there is not too much Baby Boomers can do about their investments. If you are still fully invested in managed funds then the advice must be to sit tight on the equity fund investments unless there is a significant rally to sell into.

If you managed to pull some or all of your money out then cash is a position but not for ever like the buy and hold merchants would have you believe.

Put 3-5 years worth of cash into “safe” investments like bonds and term deposits so you can pay yourself in retirement. This is what the fund managers should have been doing slowly for you so as not to affect the markets adversely and protect your nest egg.

If you do not know what is going on in the markets then you need to stand aside until things become clearer. Most gurus and pundits tell you this. Guess what, it is market timing by any other name.

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