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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: john722 who wrote (88455)	6/29/2002 1:59:32 PM
From: Softechie	Read Replies (2) \| Respond to of 99280

Barrons: THE NEW RULES OF INVESTING 1. Forget the Old Rules. The buy-and-hold mantra that was drilled into investors' psyches by the bull market of the 'Eighties and 'Nineties no longer leads to nirvana. One can't buy the dips anymore and expect to be bailed out. Just look at what has happened to all the bottom fishers over the past two and half years. Most are now losing money with little prospect of any appreciable rebound. 2. Trade the Ranges. Over the next five to 10 years, the stock market is likely to be caught in a trading range, held in check by high valuations and anemic earnings growth. Good tops for that range might be the 2000 highs for the Dow and S&P of 11,722 and 1540 respectively, though it's likely that the two market measures have yet to reach their current cycle lows. Once a range seems to be established, it can be traded, though the terrain could be treacherous for non-professionals. Some investors made a decent living between 1966 and the early-Eighties buying stocks whenever the Dow sank to around 800 and selling out when the average approached 1000. The Dow traversed this no man's land six times during the period. 3. Yield Matters. Embrace stocks that pay healthy dividends. A bird in the hand is better than two in the bush, even if dividends are taxed twice -- and legislation may change that. Healthy dividend payments also indicate that companies are generating real earnings rather cooking the books. 4. Diversify. Bonds prices are no longer moving in lockstep with stocks, which makes tactical asset allocation, or swinging between the two asset classes, even more attractive. Besides, diversification always makes more sense in trying stock market periods. 5. Shun the Old Favorites. Forget technology for the time being. Groups like gold and energy stocks had mega moves in the early-'Eighties, then didn't play again for a decade or more after their blow-offs. Yet investors will lose a ton just trying to recapture the excitement and adrenaline rush of once-in-a-lifetime bubble moves.