The 401k Market Buster (2002)
This straightforward, easy to follow book proceeds from a simple but powerful idea, that when the Federal Reserve decides to slow the economy down, or speed it up, that's what's likely to happen, and that by keeping an eye on the Fed you can discern the best times to move into and out of the broad stock market with your 401k investments. That much is certainly true--couldn't agree more--particularly at a time when we've just seen the Fed bring the U.S. economy to a screeching halt by fighting a non-existent inflation with rate hikes.
To help us understand what the Fed is doing, Mr. Kwong proposes following just two numbers : the 3-month T-bill rate and the 3-year Treasury rate :
* When the 3-month T-bill rate
is below the 3-year Treasury rate, it means we are in a period when the
Federal Reserve is allowing
the economy
to grow. When that happens, you should move into the stock market.
* When the 3-month T-bill rate
crosses above the 3-year Treasury rate, it is a signal that the Federal
Reserve is tightening credit and
is looking
to slow the economy and business down. when that happens, you should
move out of the stock market or go short.
This seems intuitively correct and Mr. Kwong has ample charts to back it up. He suggests that just by checking these two rates every day, hardly an onerous task, you can greatly improve the performance of your 401k.
There's much else here besides, marred only slightly by unsubtle sales pitches for a Market Buster website, which does not appear to be working yet. The book is mercifully clearly written and Mr. Kwong demonstrates sufficient confidence in his core insight that he doesn't lead the reader off on complexifying tangents. It's bold, direct, and it will certainly pique your curiosity. I know I intend to follow those numbers for a while and put the theory to the test.
GRADE : TBD (to be determined the next time the rate numbers
cross)
(Reviewed:10-Aug-02)
Grade: (TBD)
