by Archie M. Richards, Jr., CFP^®
February 3, 2003

Walter wrote, "I have a $30,000 account of stock mutual funds I play with. I'd like to move the account to another broker. Do I have to sell the mutual funds? When I sold a fund recently, I had to pay a back-end charge of $150."

You can move your securities to another brokerage firm without selling, Walter. Set up the new account and authorize the new firm to obtain the securities from the old.

But watch out for that word "play." When you play with stocks or mutual funds, you play with fire.

Investment play usually means frequent trading. Get yourself another hobby. Hold your securities for at least a year and generally much longer. Those who trade frequently may be following the lead of traders whose opinions they hear about on television.

Many of the so-called "traders" quoted on TV do not try to outwit the market. They earn their living from the spreads between bid and asked prices. For example, they'll buy a stock from one investor at the bid price of $20 and immediately sell it to another investor at the asked price of $20.05. When they handle 50,000 shares a day, the pennies add up.

When a television reporter asks traders for their opinions about the market, the traders are happy to oblige. Everyone has opinions. But successful traders don't usually act on their short-term market opinions. It's too easy to be wrong. They stick to accommodating customers. Like those who sell automobiles, they're dealers.

But as a customer, you don't earn the spread; you pay it. Say you buy a stock for $20.05. If the price doesn't change, you sell it for $20 and lose the difference. You pay commissions, too. The outflow of dollars add up.

In the long run, you can't outwit the market. Those who try usually underperform the market. Those who try hard by trading usually end up losing.

Chapter 10 of my book, All About Exchange-Traded Funds,advises how to be a trader. But the chapter cautions that the advice it gives will help readers to lose their money more slowly than they would otherwise. The book is amusing. You can buy it through www.ArchieRichards.com.

From an investment point of view, Africa is a comer. Here's why:

The Wall Street Journal reported recently that 46 percent of Africans are now Christians, up from only 9 percent in 1900. The fastest growing sects are radical evangelical faiths, such as prevailed in America in the 18th century.

This is great news. Evangelical Christianity is a precursor to capitalism.

With many religions, worshipers feel that their affairs are in God's hands, and there's not a lot they can do about it. Many people also believe that they are too unimportant for God to communicate with them directly.

But evangelical Christians believe that, through prayer, God is willing to communicate with them individually. They also believe that if they act properly on earth, they will receive eternal salvation.

When a person believes that he can improve the status of his afterlife, he has the self-confidence to feel that he can improve his status right here on earth. He comes to believe that, through his own efforts, he can become rich.

For capitalism to flourish, one more thing is needed: property rights that are enforcable in court. When a citizen can prove that he owns property, such as real estate, he can offer it as security for a loan to finance a business.

Two hundred fifty years ago, when most Americans were farmers, democracy took strong root on these shores. The primary reason was that, for the first time in world history, the majority of farmers owned their own land. Widespread evangelism and a reliable court system also prevailed. As a result, America became a nation of entrepreneurs.

When a broad-scaled index fund of Africans stocks becomes available, put 5 percent of your portfolio into it. It'll be a bumpy ride. But in the long run, it will be highly profitable.