There is a famous cliff on the ocean in Acapulco where experienced divers jump into the sea. It is very dangerous because the water at the base of the cliff surges from a depth of 2 feet to 12 feet. The diver must time his leap so the water is at the greatest depth when he enters or he could easily be killed as many novices before him have been. Timing is the key.

This reminds me of the stock market where timing is also the key to wealth or poverty.

The ocean waves surge in and out against the cliff in short cycles. The tide moves in and out in longer cycles and is very predictable. When you look at Nature you will see there are relatively predictable cycles everywhere. We see day become night, the changes of the seasons and birth to death of our own bodies. Some changes are so microscopically small we cannot see them and others are so long we are not aware they are taking place. Everything has a season or a cycle. It is up to us to be able recognize it and use it to our advantage.

People ask why did the stock market go up (down) today? These short moves can usually be laid to some recent event. Then there are longer surges and regressions of months or a few years. We have bull markets and bear markets that seem to have historical cycles that last decades. These latter cycles run for about 16 to 18 years and move similar to the surges of the sea against the Acapulco cliff. A knowledgeable market timer will buy when the water is out (stocks look their worst) and hit the ocean (sell) as the surge is at its highest.

The ability to do this is NOT guess work. It is an understanding that cycles apply equally as well to the stock market as they do to the forces of Nature. Unfortunately, the principles to learn this very simple technique are not taught in college. Most must learn the method in the school of hard knocks. It can be very expensive.

In our recent bull market from 1982 to 2000 we had one of the predictable long cycles. The mindset of the public has become so hardened to the bull concept that they (and almost all brokers) have forgotten that each up surge is followed by a down surge of approximate equal length. This is not very comforting to current owners of stocks and mutual funds, but once they realize it they can do the prudent thing to protect their money - sell. Then they can buy U.S. Treasury bonds and wait for the next bull market to arrive. It is not very exciting to be in cash, but it is much better than seeing your money slowly disappearing before your eyes.

You must learn entry and exit of the stock market just as the divers in Acapulco have learned the correct moment to jump off the cliff.

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.