Subject: IC940821: The Market is Making a Quiet Comeback

From: "Gray Zhu, 800-289-2498, 212-279-6700" <[email-masked]>
Date: Sun, 21 Aug 94 01:20:07 CDT

==================    IC940821: Investment Club  ======================

1. The market is making a quiet comeback ..................... Gray Zhu
2. Two cents about mutual fund investment .................... Gray Zhu
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   (be sure to read the Disclaimer in the end if you have not read)

1. The market is making a quiet comeback

In the past two or three weeks, the market has made a quiet come back.
The S&P 500 index, Dow Jones and NYSE composite index have just
emerged above or touched the 200-day moving average, giving technical
bullish sign.

The NASDAQ market has gained about 3%, half of the loss in Feb. and
March is back. Some mutual funds gained more than 1% a day. Leading
the way are technology stocks. Big money has been shifting from
CYCLICAL to GROWTH stocks.

Now the Fed has raised the rate by another 0.5%, so what? The market
gained 22 points. You expected a big market drop?

For those of you who are waiting for market to turnaround, did the
market tell you it was ready to gained 3%? How much is a "turnaround"
according to your standard?

When the market is at high, it is possible it is going higher.
When the market is at low,  it is possible it is going higher.
When the market is at high, it is possible it is going lower.
When the market is at low,  it is possible it is going lower.

=> In the two bit memory, you can put 00, 01, 10, or 11.

One perfect illustration: assume you invested $5000/year from 1980 to
1989. the worst you could do is invested the $5000 at each year's
market high, the best you could do is invested at each year's market
low. The componded total amount are $11000 and $14000
respectively. However, you can never get all the highs and lows every
year, you will be getting between $110000 and $140000 for your total
of $50000 investment.  THE BEST TIME TO INVEST IS WHEN THE MARKET IS
OPEN.

If you are sure the market is bearish, you should sell short or tell
us sell short.

2. Two cents about mutual fund investments

a) I think this fund is at high, I will waiting for it to go down.

When the fund is at high, it is possible it is going higher.
When the fund is at low,  it is possible it is going higher.
When the fund is at high, it is possible it is going lower.
When the fund is at low,  it is possible it is going lower.

When do you invest, high or low?

b) My fund is down a lot, should I move to another

Most important is identify the problem: the market or the fund. If you
fund was performing well in the past, and outperforming the similar
funds, it is down probably due to the market - hold. If it had never
been better than the funds in the same catagory, then it is the fund
manager's problem - switch to another or liquidate.

c) It looks I can make about $50 a month switch among mutual funds
with $1000, which do you think is the better one?

In my opinion, devote a lot of energy, switching among mutual fund is
foolish. It doesn't work the way you think, if you can consistently
you make 5% a month, I will let you invest for me, or you can set up a
mutual fund of mutual funds.  With the energy you spent there, you can
make $50 anywhere. If you like to trade frequently and do well, you
can probably make more money trading futures.

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