Now where have I heard that before? I know. It was my broker.
So I took his advice and bought some of the stocks he recommended. I am still waiting for the 'sell high' part of the equation. Everything he touted went up for a while and now it is lower than when I bought it. It is so low I can't bring myself to sell it. My capital has shrunk about 60% from where I started. That's a lot of money to me because it took a long time to save it. What happened?
The brokerage company that your broker works for puts out recommendations almost very week for various companies listed on the major stock exchanges. They have simple things like Buy or Strong Buy. Then they have a complex group of words used when they downgrade a stock. It never goes from Buy to Sell. No, it becomes Accumulate, Underperform, Attractive, Market Perform, Neutral or some other meaningless term. If any stock is ever downgraded even one notch sell it immediately. Finally after a stock has lost 50% or more of its value it becomes a 'Hold". And you know where you are holding it.
Last year the brokerage companies gave over 33,000 stock recommendations to their customers. Of those only 125 were Sell. On the NASDAQ exchange alone there were over 1,000 stocks that lost more than 90% of their value. The "experts", known as analysts, were all telling you to buy. Your kid could have thrown a dart at the Wall Street Journal in 1999 and done as good a job as almost any analyst. What I want to know (and I think you do too) is if they were smart enough to tell you to buy then why weren't they able to tell you to sell?
I'll tell you why. Brokerage companies never give sell signals because they don't want to offend a company that might come out with a public offering on which they will make a killing. It is better to kill a few customers than miss out on several million dollars. You pay commission and ask for honest advice, but you are being fed disinformation.
Is there any way you can protect yourself from this nonsense? Yes! It is called a stop-loss order. Brokers don't like them because then they have to watch your account. He will tell you you don't need it as he will watch your account. And pigs can fly. The average broker has 300 accounts and unless you have a large 6-figure account you will be on the bottom of the pile.
Anyone can place a protective open stop-loss order for stocks. Most are about 8% to 15% below the highest closing price. I recommend that each Saturday morning you look in the paper for the Friday closing price of your stock and place your open stop each Monday morning with the broker. As your stock moves up keep raising the stop and you will sell near the high. Never lower it. This will lock in your profit or take you out of a losing position. I can assure you your broker will never call you to sell. Brokers are not taught to protect your capital.
This is the only way to buy low, sell high, protect your capital and lock in your profits.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
http://www.mutualfundmagic.com; 1-888-345-7870
Chicago limo Skokie ..You have heard about a particular mutual fund from a... Read More
You remember (they show it on TV every year) the... Read More
In 1960 an engineer working for a watch company in... Read More
You may have wondered why your mutual funds have been... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
People are always asking me when should I sell my... Read More
One of the things people are always asking me is... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Before they go over the cliff to their destruction these... Read More
I have watched my cat play with a bag of... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
Now where have I heard that before? I know. It... Read More
A colleague of mine just returned from a scuba diving... Read More
Ever have one of those sample boxes of candy? Each... Read More
Mutual funds were moderately successful in creating a presence in... Read More
For the year 2000 we have seen hundreds of mutual... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
First let's see what protectionism is. According to Mr. Webster... Read More
Suppose your position has made a big move and you... Read More
As an investor you will want to check out any... Read More
The thinking process of the brain relating to the... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
How many people went to a cash position this week?... Read More
There is no question that the stock market is being... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
limo O'Hare Bonfield ..I go to the Money Show every year to visit... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
Did you know you can make money (and a lot... Read More
If you have a pension plan at work you will... Read More
One Saturday morning, while he was sitting at his computer... Read More
If you don't know what a Roth IRA is then... Read More
I continually hear from economists, talking heads, other market letter... Read More
One of the things people are always asking me is... Read More
Having lived aboard a sailboat for 2 years I was... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
Recently I was invited to appear on a live CNNfn... Read More
I use the P/E ratio as a secondary indicator for... Read More
Mutual fund investing is a lot like Thai cooking. Everyone... Read More
When it comes to stock market trading it PAYS to... Read More
Well maybe that's overstating it a little, but it's certainly... Read More
Wall Street's watchword has always been diversification, but what does... Read More
Someday you may want to retire and continue to live... Read More
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
There are red lights, green lights, blue lights and spot... Read More
All of the talking heads have been telling us that... Read More
After the publication of the first part of this two... Read More
I often play a little game with myself when I... Read More
There are formulas for just about everything, but it has... Read More
Before we get into all the good news out there,... Read More
Recently I watched my favorite football team lose a vital... Read More
Stocks & Mutual Fund |