As Easy As 1, 2 Trillion

This is like one of those business offers on the inside of a matchbook cover.

"Earn big dollars in your spare time ... work from home and become a millionaire ... start a fabulous new career working just 10 hours a week."

But this is legit.

All you have to do is read this column, and you can become a prominent Wall Street analyst - million-dollar bonuses, summer house in the Hamptons, frequent appearances on television and in newspaper columns to explain what in the world is going on with the stock market.

Just keep reading, and you will have the right stuff, the know-how, the know-wow to dazzle 'em with your financial footwork.

You need to grasp just one fact, a number, to merit the big bucks. No MBA required.

Here it is.

5,170,000,000,000.

That's it ... the key to your PhD. in dough-re-mi.

That number represents the dollars that Americans have plowed into mutual funds.

How hard is that to remember?

The number is key because it comes in just below the number of dollars Americans have in bank accounts.

And it's not too far below the size of the American economy.

The point is - and all you really have to understand - is that $5.17 trillion is an incredibly huge bundle o' bucks.

It's mostly baby-boomer money, the dollars they have invested through mutual funds in order to avoid the joys of trailer park living when they retire.

The fact that it rivals the money held in bank accounts suggests that American investors have as much faith in the security of the financial markets as in federally insured bank deposits.

And if they keep their mutual-fund money in stocks, and keep adding to it - as they have been for more than a decade - the stock market will go up.

If they start to pull that money out, the stock market will go down.

Simple as that.

Any talk about price/earnings ratios, corporate profits, inflation, Asian currency crises, and other sophisticated financial concepts, at this point, is mostly noise, window dressing.

Just over a week ago, for example, mutual-fund investors pulled a chunk of their money out of stocks. A few days later, the Dow Jones Industrial Average tumbled almost 300 points.

This is what the experts - the ones with the big bonuses - call a liquidity-driven market.

For example, last week one of the two biggest-name market strategists - Ralph Acampora of Prudential Securities - forecast a sharp market correction, and the Dow capitulated.

The next day, the other big-name strategist, Abby Joseph Cohen of Goldman Sachs, said stocks will continue to go up. And they went up.

Nothing happened, just two people talking. One scared money out. The other sweet-talked it back in.

So, if you can figure out what makes baby boomers come or go, you'll know whether it will go up or down.

And that in itself constitutes a call for caution. A liquidity-driven market is one that can turn on a dime. Last Thursday and Friday. the Dow whipsawed, swinging more than 100 points both ways before closing higher.

The boomers are restless.