Mutual Funds Strategy to Protect Your IRA and 401k

The S&P 500 Index is a list of the 500 largest companies in the world such as Target, AT&T, Apple, BP, Coke and many more. By watching the S&P 500 Index you can see what and how the overall market is doing. Other indexes are the Dow Jones Index but it only has 30 companies and the Nasdaq Index which has many small companies. These two Indexes follow the direction of the S&P 500 Index because of its more well known companies.

To see how the this works is go to any website financial page and click on the name of this index. Next is to set the time frame for months. When you are viewing the market over the last 12 months with the month to month price rather than the day to day price you will find all the zig zags are eliminated.

The zig zaging of price movements is where investors become confused because all they see is the changing in price. This is caused from the buying and selling of stocks from thousands of investors. Setting the time frame of the stock market chart to be viewed from month to month instead of day to day makes all these lines you see in a chart become straight. When doing this you will see the straight lines over many months as well as years. The stock market becomes a picture on pause because you are able to see when the market was going down and up.

To know when the market is declining and losing money is to look at the 1 year low. The 1 year low means the stock market price is below the same price it was 12 months ago. It also means no money was made in your retirement fund. When the stock market is above its 1 year low in the past 12 months you can rest assure that the stock market has stopped declining.

To see if the market is leveling out and not going down is to look at its 1 year average. The 1 year average is the average price over the last 12 months. As long as the stock market is above its 1 year average this means the stock market is rising and you are making money in your IRA and 401K.

A lot of articles will write about a mutual fund investment strategy but none will tell you why or how the strategy works. The answer is right in the chart because this is physical evidence of what is presently going on every day. These are real companies with their stock prices going up and down. When most or all stock prices are starting to decline, it is the sign that investors are selling. The reason they are selling is because these companies are about to be earning less money than before. Stock prices go up when companies increase theirs earnings and they down when their earnings are decreasing. You can see this yourself by looking at the S&P 500 Index chart.

This all points to our economy. Our economy is base on the gross domestic product. This is the increasing and decreasing of services and products that are produced by business services in the U.S.A. The Government have Economists study how the U.S. economy is doing every month. These reports show how the manufacturing of products, employment, business services and retail goods are performing currently and in the past. It easy to see if the U.S.A. economy is in a recession by comparing it to the stock market.

Investing points are:

A. The same companies in a IRA and 401k plan are in the S&P 500 Index which is the stock market.

B. It is viewed as of the most watched Index because of all the well established companies.

C. Mutual Funds are a portfolio of stocks from hundreds of companies.

D. View the chart of the S&P 500 index using the month to month price and not the day to day price.

E. It has to be above its 1 year low because this means the stock market is no longer dropping.

F. It has to be above its 1 year average for the stock market to be rising up. The 1 year average is the average price over the last 12 months.

To learn more about stock market cycles and trends is to visit the website that shows you how to become a better investor. The best investment strategy for mutual funds is being able to transfer from declining mutual funds in to safe funds.

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Source by Lee R. Smith

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