The Sky Is Falling

Now that I'm a Foolish Investor, my "snail" mailbox is getting flooded with ads for newsletters boasting of sure fire ways to make 300% annual profits, or warning me to go "100% cash" to avoid the impending crash.

My recent favorite was for a newsletter called the Wall Street Underground (WSU). Actually, I've never seen the newsletter but I really enjoyed the ad. On the outside envelope was a frightening boldfaced warning: "THE DOW IS ABOUT TO GIVE BACK A YEAR'S WORTH OF GAINS IN A DAY!"

Wow! . . . and I haven't even opened the envelope yet.

It goes on. . . "This market is in the ozone. Every measure of value screams out its warning: the market must crash and crash soon. The life savings of three generations will be wiped out overnight. " --- Nick Gurino

"Inside. . .

---How the stock market is being manipulated to record highs, despite the worst fundamentals in a decade

---Why the coming crash will wipe out every mutual fund, retirement plan, and stock investment in America

---Why the flight to precious metals after the crash will launch gold and silver to new 15 year highs

---The only three investments that will let you ride out the crash in safety"

. . . And I still haven't opened the envelope yet. Should I? Do I feel compelled to learn who Nick G. is? Do I, huh? Uh, well, nah. . .

I've read "Beating the Dow," "One Up on Wall Street," "The Warren Buffett Way," "The Wealthy Barber," "The Motley Fool Primer," and, as soon as I get my hot little mitts on it, I'll read "Investing For Growth" by our own MF DowMan. I've learned that even with the crash of '29 and '87, it pays to stay fully invested. In the long run, picking strong companies that have good management and reasonable growth rates compared to their price/earnings ratio will do better for me than going to 100% cash at any time. Why? Because the first ten times I go to cash, I'm going to miss out on the biggest Bull Run the market can muster. That, my friend, is called Murphy's Law (and not a reference to Michael Murphy, either). The one time these Naysayers are correct would not make up for the ground I'd lose during all the times they're wrong, plus the added commissions of getting out and in again. Oh sure, they will be right---someday. After all, even my broken wristwatch is correct twice a day.

Anyway, I filed this ad under Waste Management. . . and went back to reading my book, "Chicken Little."

by MF Cubster, The Motley Fool (10/17/95)