Forget the Past

One of the most common disclaimers heard on TV before the age of Viagra was, "Past performance is no guarantee of future results." That phrase not only applies to investing products, it's also true for investing philosophies as well. Some of the hottest investments from just 10 years ago have no place in your portfolio today. And while you're cleaning out your portfolio, clear out the idea of buy-and-hold investing from your playbook, too. Read today's rant to discover why some of your old strategies should come with a disclaimer of their own today.

Toby

Money-Doublers on Sale for Peanuts

If you trade options -- or if you've ever wanted to -- a $99 investment can earn you tens of thousands in extra profits.

Get the details here.

The Mutual Fund Industry's $3 Trillion Lie

It is said that generals have a tendency to fight the current war as if it were the last war.

The common mistake they make is to not appreciate the differences in landscape of this battle because of change that resulted from the last war. Plus, they often fail to acknowledge that the current war bears no resemblance to the last one.

The mutual fund business, and the brokers and advisers who sell them, have been telling investors an old story: "Don't worry -- if you are a long-term investor, you have nothing to fear. Actively managed equity mutual funds always outperform over any five-year period."

Well, that strategy is a big lie, and you ought to know it.

Truth in Numbers

The numbers tell the real story. Look at the 10-year total return for some of the largest mutual funds from 1999 -- ones that are offered in virtually every 401(k) or IRA plan in the United States.

* Fidelity Magellan Fund (FMAGX): Down 30.2%

* Fidelity Growth & Income (FGRIX): Down 40.9%

* Fidelity Advisor Growth Opportunities T (FAGOX): Down 51.8%

* Vanguard US Growth Inv (VWUSX): Down 55.2%

* Putnam Voyager B (PVOBX): Down 33.9%

* Putnam New Opportunities B (PNOBX): Down 35.9%

* Legg Mason Value Trust (LMVTX): Down 35.0%

* Fidelity Advisor Diversified Stock O (FDESX): Down 49.4%

* MFS Growth B (MEGBX): Down 34.7%

* American Century Select Inv (TWCIX): Down 31.3%

Source: Lipper

The carnage is shocking. More than a dozen of the largest and most popular U.S. funds in 1998 have lost 30% or more during the last decade.

So here's the plain-and-simple truth: Being a passive investor -- buying and holding for the "long term" -- is a fool's game in this rapidly changing world.

Don't ignore the fact that the great bull market of 1982-2000 was, in fact, a once-a-century anomaly. And don't ignore the fact that when you remove the 1995-2000 Internet/tech stock bubble and the 2002-2007 financial services bubble, you lost money owning stocks during that period after inflation.

If you can afford to lose 30%-50% of your hard-earned investments during the next 10 years, then by all means stick with your buy-and-hold strategy.

But, I'd rather that you face the reality of the real return world: Mutual funds are the biggest wealth destruction racket ever because the times are changing too fast for the old world of buy-and-hold.

Save Yourself and Your Wealth

To build wealth -- and keep that wealth in stocks -- you have to be able to change your investment strategy and adapt to the violent expansion and contraction cycles of the new global economy. That means there will be periods of boom when it's appropriate to be long equities, and periods of bust when it's not appropriate to own stocks.

Why?

Because our economy changed when 2 billion new consumers began buying, thanks to the conversion of China, Russia and India into modern societies. Those economies are like ours was in the 1950s. They are just coming out of decades of slumber, and they need everything.

But their insatiable need for growth also brought a new dynamic to the world of stocks: higher rates of boom and bust.

The world's capital markets needed to adjust to a doubling of people living under modern forms of capitalism and, when it comes to the first go round, we failed.

The financial system got the new Global Capitalism 1.0 wrong. In fact, this is what the financial crisis is really all about -- and we are paying the price now.

We thought if we securitized debt and sold it around the world, it reduced risk. It did not.

We thought if we doubled the amount of leverage in the financial services world, it would bring higher rates of overall return and that we could hedge that risk with derivative contracts. It did not!

We thought that buy-and-hold investing would continue to work, and guess what?

It did not!

What's Working Now

What does work?

1) Measuring the business cycle via real-time surveys to forecast economic expansion and contraction. This is the kind of information we get from our Alliance research about the business cycle almost every day.

2) Going long the early cyclical and secular growth stocks when the economy is beginning to expand.

3) Selling stocks and shorting equities when that violent growth cycle peaks and dies due to the unsustainable growth of the boom period.

While everyone is worrying about the market being down 9% in January and being crappy for another year, why not make money and grow wealth during this predictable contraction. Here is how we made money in January while the rest of the world played victim and continued to get killed in mutual funds.

* Our favorite short financials ETF: Up 33.4%

* Our favorite short ETF in emerging markets: Up 21.45%

* Our favorite short oil: Up 6.56%

* Our favorite short real estate: Up 4.64%

* Our favorite short small caps: Up 15.38%

We were able to capture profits in excess of 100% in many of these instruments in 2008 while the entire market was collapsing. (To learn how we did it, sign up for a risk-free trial of ChangeWave Investing.)

Choose Your Path

You can be a victim or a winner -- it's your choice.

If you are tired of being the victim, adjust your investment strategy to the reality of the 21st century. A new world economy requires a new way to build and keep financial wealth.

If you are going to ride the bigger waves of the new global economy, you gotta know when to get on and get off.

Our macroeconomic surveillance system has proven itself three times in the 21st century -- off stocks in early 2001, on stocks in March 2003 and off stocks early January 2008.

It's not market timing, it's riding the extreme waves of economic expansion/contraction in the new global economy.

You can be the one at the cocktail party who says "Hey, what bear market?

Let us help you be a winner in this game.

Toby

P.S. P.S. Don't continue to be a victim of mutual funds and a buy-and-hold mentality. Join us at ChangeWave Investing today and be a winner as we help you move your investment with the momentum in the market.

Dead Banks Walking!

The big banks plunged on Inauguration Day. Citigroup, JP Morgan and Bank of America dropped about 20% on average. No bank stock is safe. In fact, key analysts are now saying the entire system is ruined.

We've got a bunch of "dead banks walking," ready to topple over and crush the U.S. economy. While most people are panicking, you could be getting rich.

Get the details on how to profit from this calamity.

Watch 'Bulls & Bears' on Fox News

Be sure to tune in to Fox News Channel this weekend and join Toby and the crew on "Bulls & Bears" for their weekly market roundtable as they kick off the Fox News Channel business block on Saturday, Feb 7, at 10 a.m. Eastern. ("Bulls & Bears" replays at 4 p.m. Eastern, Sunday, Feb. 8, and 4 a.m. Eastern, Monday, Feb. 9.) Or you can catch the show Saturday evenings at 6 p.m. Eastern on the Fox Business Network.

29 Stocks to Sell Immediately

If you own stock in Research in Motion, Hewlett-Packard, Men's Warehouse, Goldman Sachs or 25 other ticking time bombs, get out now! Some of these companies are household names, while other may not be so familiar. But they could all pose a huge threat to your retirement, your portfolio and your lifestyle in the next 12 months.

Learn more here

Wine Find: A Syrah to Shake Off the Cold

We're feeling the chill on the East Coast and cold weather means braised foods like the great short ribs with adobo chiles Marjorie made this weekend!

Syrah is big and bold enough to hang with this rich food, and the Jade Mountain Red Hills Lake County wine is a winner.

It comes from a single vineyard called Snows Lake and has that luscious, smoky raspberry and big red fruit I love in Syrah. And it pairs wonderfully with red meat, savory stews and rich paella.

To share your favorite wine or food experience, e-mail me through the form at www.changewave.com.