Keep Your Powder Dry In A Market Like This

Keep Your Powder Dry In A Market Like This

Do you remember the frenzy or froth moves that were among the wildest aspects of the late-1990s bull run

In those days it was common to see gains of 20 and 30 points or more in one session. A stock might open at 120, promptly run to 150, settle back to 130, and then sprint to 150 or higher at the close.

The true frenzy plays popped at the open on a bit of news or rumor. The excitement spread, pushing the stock ever higher. Suddenly, the entire market realized that maybe the news wasnt all that great and maybe shares that were selling at $20 yesterday really werent worth $50 today. Then the stock often sold off hard, pounded by short sellers back down to $20 or lower and the poor souls who bought at $50 were left holding the bag.

But for serious day traders with the proper tools and nerves of steel, it was heaven.

Today you dont see those point gains because the price of most stocks is much, much lower. But gains of 20-30% in one day do appear from time to time.

Were all human and say to ourselves, Wow, I wish I had been in that thing! when XYZ stock pops from nine to 12 at the open. But you shouldnt be too eager to buy into a rocket unless you have the proper day trading tools.

Why Because the news or hype that drove that stock at the opening bell could dissipate at the moment you place your order. All too often, XYZ will jump from nine to 12 and then head back to nine or even into negative territory as the traders who got in early cash in their profits. Youll probably be forced out of your position at a significant loss as the pain becomes too great. If you hang onto the shares, you could be stuck with a loser for a long, long time.

So if you sense a frenzy building, hop on while it is still in the scope of reality and take the ride up. But once its over, its over. Get out and walk away. If you missed the initial build-up and the 9-buck stock is at $12, the prudent thing is to stay away. Sure, it could go to $20, but its more likely to go back to $9.

Keep your powder dry. There will be other frothy plays on other days.

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The Gold ETF: Maybe The Best Way To Own Gold

Lets start off with the assumption that you want to own gold. You want to own gold as a hedge against inflation. You want to own gold as a hedge against a declining currency, like the U.S. dollar. And you want to own gold -- well, for the same reason you would make any investment -- because the price is likely to go a lot higher in coming years.

But how do you own gold Until this year you had two basic choices: You could own the metal or you could own shares of gold mining companies (for the purpose of this discussion Im leaving out gold futures). The disadvantage of owning the metal is that its not convenient. You have to store it and insure it. Thats a pain. And the transaction costs can be high when you go to buy or sell it.

The disadvantage of owning the shares of mining companies is that you own a stock. And you have all the risks that you would have in owning any stock. Management may make poor decisions. Increased operating costs could hurt earnings. The price of the stock could go down while the price of the metal goes higher, etc.

Theres a third way to own gold. And it may be the best way. StreetTracks Gold Trust (symbol: GLD), makes purchasing gold just as easy as buying shares of Microsoft or Starbucks. Its innovative and it offers a very liquid and cost-effective way to invest in an important asset that, until now, was not available to individual investors. In fact, it is so innovative and such a major advancement that it will dramatically change the way investors look at investing.

Here are some relevant facts about GLD

The investment objective of the Trust is for the shares to reflect the performance of the price of gold bullion less the expenses of the Trusts operations. The shares are designed for investors who want a cost-effective and convenient way to invest in gold.

One unit (share) of GLD represents 1/10 of an ounce of gold. For example, if gold is at $470 an ounce, the shares will be priced at approximately $47.

GLD trades on the New York Stock Exchange.

It trades at a very small premium or discount to gold at any given time -- usually less than 1%.

Expenses are low -- currently 0.4%

GLD is very liquid. There are 66,900,000 shares outstanding. Average daily volume is almost two million shares. Assets are currently valued at $3,155,106,000. And thats after less than one year of trading.

The StreetTracks Gold Trust has been one of the most successful new financial vehicles ever launched. And for good reason -- GLD is a great way to buy and sell gold.

Larry Holmes invites you to visit http://www.Money-Management-Wisdom.com/ You will learn how to become debt-free, save and invest money, cut taxes, manage risk, and achieve financial freedom in a much shorter time than you dreamed possible.

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