You know what they are. Little rat like animals that become so over populated that they decide to have a party on the other side of the valley. Everyone joins in and they start running. Unfortunately to get to the other side it is not wise to head directly there because there is a thousand foot precipice in their path. Oh well.

We have our own lemmings. We call them investors. They feed on the good news about how well the economy is doing. Unfortunately, how well the economy is doing and how the price of their stocks and mutual funds are doing are two different things.

The lemmings, oops, stockholders, have been taught to believe all the good news and buy when the talking heads tell them. Brokers and financial planners know so much more than the lemmings? They should not be questioned. Lemmings, there I go again, investors should give their money to the brokers and let them do anything they want with it. Thats what Wall Street says. Look at the millions they are making.

Right, but what about your account? What happened to it a few short years ago in 2000? You havent forgotten have you? Those who ran with the pack last time went over the cliff and lost most of their money.

Some of the lemmings decided they would not play in the stock market where they could lose everything. These smart ones chose to invest in real estate and have been doing very well. Nothing down or almost nothing down, get a low interest mortgage and watch the home values rise. Sell out for a big profit?

Real estate never comes down. Well, hardly ever and then not very much. Nothing to worry about here. Unfortunately, it seems interest rates are rising. Many of these homes and lots of the speculative ones have been bought with interest only mortgages. Many are due for upward adjustment this year. Suddenly that $600 payment could become $735. It will be a shock their bank account did not expect. Looks like another cliff for the lemmings.

House prices cant possibly be coming down. Lets hope not. Then tell me why the stocks of some of the largest home builders in the nation have fallen 50%. Do they know something the lemmings dont?

Because most late comers to various investments whether it is stocks, housing, tulip bulbs, south sea islands, whatever almost never seem to recognize when the top has been reached and it is time to cut and run. Once the mind is set it takes a Caterpillar tractor to run over it to make a change. The professional investor will recognize a market top and get out with a small loss. Joe Sixpack doesnt understand that a small loss is preferred to a big loss.

Now is the time to reevaluate your portfolio whether it is stocks, mutual funds or housing as the market is changing.

Dont be one of the lemmings.

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.