Stock Chart Reading

As an investor you will want to checkout any equityNovember and very few at other times during
before you buy it. Many investorsgo to Morningstartheyear.
which is one of the largestproviders of mutual fundSome nitpicker called the SEC and madea complaint
information in the world.about Morningstar. Not that I am a bigfan of them (in
It is assumed that their information is correct.fact I think their reports areworthless) they get their
After all that is what you are paying for.price information fromother sources such as the
Recently the SEC (Securities andabove. If you are notfamiliar with the requirement of
Exchange Commission) called them on the carpetmutual funds todisburse their profit before year end
fornot correcting an error within a reasonable timeyou might befooled when you see the price suddenly
(whatever that is according to the SEC).drop.
Everyonemakes errors and this was no big deal.This is important for potentialinvestors. I caution
It seems that when you went to theirsite and dreweveryone to get a chart onthe Internet of at least a
up a chart or asked for statisticson Rock Canyonone year performance ofany mutual fund before
Top Flight mutual fund it failed tonotify the potentialbuying. It is better to goback to year 2000 to see if
buyer that the fund hadissued a very large dividendthe fund manager wasable to keep from losing
of approximately 25%and the NAV (Net Assetmoney during the last 4years. Almost none of them
Value) dropped from $15 tocould so they bamboozleabout how they did better
$11 to reflect the $4.00 dividend.than the S&P500 Indexwhich had a huge loss of
When you ask for a chart of this fundon50% and remains down 25%from those highs at this
MarketWatch, Yahoo, TheStreet or Bloombergtime. Don't fall for thatone.
theyonly post the NAV and do not make anyOnce again I caution that any purchaseshould have
adjustmentfor the dividend or capital gainsan exit plan. One of the basic rulesof investing is
distributions.never to lose a lot if you arewrong. Small losses will
Looking at the chart it appears the fund fell outofnot ruin your portfolio,but big losses can ruin your
bed. Because I look at so many charts Iretirement. Set yourloss limit (5%, 10% or ?) and
knewimmediately that this was a distribution andstick with it.
notsome calamity. It is best to call the fund toverifyCharts can help you withbuying/selling decisions, but
this.check out theiraccuracy as charting is not an exact
Most funds that make dividend and capitalscience.
gainsdistributions usually do so in December, some in