Investing Isn't That Simple

Tom Lydon manages $65 million dollars. In my books that makes him a smart guy. I have no doubts that anyone who can get others to pony up that amount of money must know a thing or two about making money in the stock marketing.

What bothers by are the out-of-context and over-simplified recommendations that come from investment professionals such as Mr. Lydon. In a recent article he writes that, "To protect against steep losses you should sell out if an ETF breaks below its 200-day moving average or falls 8% from its peak, whichever comes first." Come on! That's nonsense. If you did that with the most popular emerging market exchange traded fund (EEM) in the last three years you'd be kicking yourself now (see graph below). Where's the easy-to-follow and equally important rule of when to buy back in?