Fred Mcallen Charting and Technical Analysis

               Charting & Technical Analysis
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From the Author:

First and foremost - If you have not read 'Charting and Technical Analysis,' then keep your investment money in the bank. Don't be investing, trading, and losing your investment capital. That statement also refers to, and includes, using a Financial Advisor.
Trading or Investing without the knowledge you will gain from Charting and Technical Analysis is nothing more than a Crap Shoot. If you're lucky - you might win. If you're not lucky - you may lose it all...

Why every Investor needs Charting and Technical Analysis to be successful:

You must know WHEN to invest. Let's look at some of the common mistakes that Charting and Technical Analysis will help you avoid.

The fallacies of investing:

1. The belief that holding an investment long term is safe and profitable.
2. Diversification prevents loses.
3. That Mutual Funds are safe.
4. That Dollar-Cost Averaging is smart.
5. That Financial Advisors are investment professionals.

These fallacies lead to financial suicide for some investors.

The one key to investing that most every individual investor misses and is a huge mistake is:

# 1: Investing at the wrong time.

What is the reason for all investing mistakes?

   * Either purchased the wrong investment

    * Or purchased at the wrong time

Now, during an advancing bull market, more than 80% of stocks and investments go up. “All ships rise and fall with the tide” is a phrase used regarding the market and is historically true.

That’s why most mutual funds and stocks return a profit in good market times. Everyone’s a genius in a bull market! Thus, even purchasing a bad investment can sometimes turn a profit during an advancing market. But during a market decline, and especially a bear market, more than 80% of stocks and funds decline.

That's why investing at the RIGHT time is by far the most important strategy when devising an investment plan. That is 90% of the battle.

For instance:

Is Microsoft a good investment? How about Walmart, HP, GE, or most any other financially sound and stable company? Sure they are!

But was Microsoft a good investment in 2000 at $60 per share? Walmart at $72, or GE at $50? No! Even buying these Blue-Chip, Dow Industrial components at the wrong time would have resulted in a huge loss that you would still be holding more than 10 years later.

# 2: Mutual Funds are not safe.

The same is true for mutual funds.

Buying shares of a fund at the wrong time can result in financial disaster. Are mutual funds a bad investment? No! But just like stocks, there are good ones and bad ones, there are more than 15,000 different funds available and very few consistently make money. But buying one at the wrong time reduces your chance of success to NIL.

Now, an advisor is going to sell you a mutual fund if they can. This is because they have a sales quota to meet and mutual funds not only pay the highest commissions up front, but they also pay ‘trailing commissions.’ This means constant commission income from your investment dollars AFTER the sale.

# 3: Diversifying

Diversifying is one of the most MIS-LEADING tricks of the trade. The typical Advisor's sales pitch is to tell you to diversify. That way they can sell you a bunch of different products under the premise of holding for future profits - With absolutely no regard to what the current market is doing or may be about to do. That is the only form of investing 99% of them know. And 99.9% of them know nothing about Technical Market Analysis.

   * Diversifying does NOT prevent losses.

Diversifying your portfolio with a percentage of stocks, bonds, funds, etc. is only good when investing at the right time. By watering down your portfolio, at best, you limit your gains and you might only lose a little less, but you’ll still lose. Meanwhile, the advisor and investment firm make money whether you do or not. Especially with mutual funds - those fees continue even as your balance declines.

Look at it realistically:
In 1999 - 2000, 2006 - 2007, or during any market highs, did diversifying prevent any of those investors from taking huge losses to the tune of 30 to 60%? No! They still lost money.

Statistics show that during the market highs of 2000 and again in 2007 the inflow of money to investments was the highest ever recorded. The Financial Advisors sold more investments during the WRONG time than any other time. Every one of those sales resulted in a loss.

Look, It doesn't matter how you mix up your holdings, you can NEVER diversify your way to profit. Without a plan to protect your capital during bad market times, you are going to lose.

A diversified loss is STILL a loss - a loss that you may hold for years and may never break-even.

# 4: Dollar Cost Averaging.

There is ONLY ONE time to use the Dollar Cost Averaging approach.
       * That is in an advancing market while in a profitable position.

NEVER Average DOWN - adding to a loser! Do NOT fall for some stupid sales pitch to buy more of a losing investment. They will tell you "It's on sale." Or they will tell you to, "Buy more while it's cheap."

You DO NOT know where the 'Bottom' is!

What if you averaged down in GM, Enron, Lucent, MCI, Nokia, or any other loser? What about Frontier Mutual Fund?
If you invested $1000 in Frontier Funds and held on until it cashed out and closed in April 2010, you would have had about Eleven Bucks left. Can you imagine what your loss would be if you continually purchased more on the way down?

Dollar Cost Averaging should ONLY be used when:

    * Market and investment are advancing
    * You are in a profitable investment

Remember: Add to a Winner - NOT a Loser!

So how can you be successful?

Knowledge - Educate yourself

Know WHEN to invest and WHEN to keep your money safe. A wise investor doesn't have to be a GURU and pick the big winner of stocks or the top-selling mutual fund of the month. He or she only has to know WHEN to put the money at risk and WHEN to keep it safe.

Buying at the right time places the odds of success in your favor. Remember, that is 90% of the battle.

Don't be fooled, unsuspecting, or uninformed. It's your money!

I have spent more than 25 years in the business watching uninformed investors lose their money buying at the wrong times. Being uninformed or relying on a salesman to make their decisions, they are just lining up behind the other Lambs to the slaughter.

I made it my passion to give the individual investor the necessary tools to be successful. Without this knowledge you will lose.

Learning Charting and Technical Analysis is an 'absolute must' for every investor and trader, regardless how much money you have to invest.

You will know:

    * When to Invest
    * When to move to safety
    * When the Pros are buying
    * When the Pros are selling

You will learn to:

    * Recognize market tops and price tops in stocks - As they are forming
    * Recognize changes AS they are happening - NOT after the fact
    * Limit your Risk

Most importantly - You will learn to be successful.

No, I'm no salesman. I don't offer a dozen worthless bonuses, have a BUY button in every paragraph, or try to sell you on some gimmick.

I do provide you with the knowledge, experience, and tools that you need to be successful.

"Do yourself, your family, and your investing future a favor. Spend less than 10 bucks for your education instead of losing 1000 times that amount making mistakes or relying on a salesman for bad advice. This book is 260 pages of detailed knowledge and experience that I have used successfully for 25 years in trading. You will learn when to buy, when to sell, and when to keep your money safe."

Do this: "Either educate yourself to be a successful trader or investor, or keep your money safe in the bank. It really is that simple."

Charting and Technical Analysis is for every trader and investor. Whether you own Mutual Funds, stocks, bonds, or simply have a 401K. you must learn to invest with the market, not against the market.

~Fred McAllen