siding companies soffit installation grayslake cement board siding vinyl siding installation siding calculator skokie .. Chicago Drug testing

Gurgle Gurgle

Caught in a whirlpool and being sucked under. No life vest or other device to save you. Gurgle, gurgle. Down you go.

This last couple of weeks in the stock market kinda feels like that whirlpool when you look at your financial statements. Of course, your broker will tell you this is a "normal correction and it gives you a chance to buy more so you can dollar cost average. He could be right about this being a correction, but dollar cost averaging down is 100% wrong. The proper way to average into a financial holding is buy more as it goes up in value, never down.

There is a basic law of physics that applies equally well to many things including the stock market. An object in motion will remain in motion in the same direction until interrupted by another force.

Keeping that in mind before you buy any stock or mutual fund is very important. Just because something looks cheap does not mean it will increase in value because you bought it. Usually there is a compelling story to go with it, but that doesn't mean anything.

How can you know if what you are going to purchase has a chance of going up so you can profit from it? Let's go back to the basic law of physics. Is it going up now? Many professional traders will want to see an equity that has been moving steadily higher for at least 3 or 4 months and rising at the rate of at least 3% per month. They also don't like sky rockets that are going almost vertically as these are too dangerous and many times will fall as fast as they climbed.

You must also protect your capital at all times. Anyone who purchases stock or mutual funds without an exit strategy is doomed to lose his money over time. How? Very simple. You may very easily put a stop-loss order in place that will not allow you to lose more than 10% of your investment. Brokers discourage these as they have to watch them - and you should too. Your stops orders should be placed immediately after your purchase and before you hang up the phone. At the end of each month if your equity has gone up you should move up your open stop loss to lock in any profit that is accumulating.

If you will go back to study the price action of stocks and funds you will see that once an equity starts in a certain direction - either up or down - that course will be maintained for many months and sometimes years.

People hate to lose money, but one of the important rules is never to lose a lot of money. Small losses will not kill you, but big losses can make that gurgle, gurgle sound.

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

In The News:

Stealth Bull

If you have been watching the stock market at all... Read More

Trade Stocks for Real

I read a comment by a forum member on another... Read More

Its Snowing

The Winter Games for the Olympics are coming up soon... Read More

Some Good News for A Change

Before we get into all the good news out there,... Read More

Performance Funds

Mutual funds are doing more and more to discourage investors... Read More

Where Is The Beef?

Where is the beef? Or maybe it should be where... Read More

Stocks & Oil, Sat Jun 18th, 2005

Both the stock market and oil prices rallied recently, which... Read More

Lifestyle Funds Provide Greater Security?

With the stock market stubbornly refusing to settle down and... Read More

Valuation

Every day I hear from the "experts" on CNBC-TV and... Read More

Boiler Room 7/17/00

On Friday or Saturday evening my wife gets a movie... Read More

Small-Cap Stocks: The Beginning of the Journey

When an individual investor wants to roll up his sleeves... Read More

Economists

In today's volatile and confusing stock markets everyone is searching... Read More

The POWER of a Proven Stock Investment Plan

When you invest in the stock market for ever-increasing cash... Read More

What Are You Waiting For?

Do you own any mutual funds? In an IRA or... Read More

The Club

Yesterday I received my monthly issue of MONEY magazine. This... Read More

No Load Mutual Funds or Exchange Traded Funds (ETFs)?

If you are fed up with early redemption charges and... Read More

Choosing A Fund

For years I have been saying you must have a... Read More

Rebalance And Diversify

The stock market has not been very kind to your... Read More

So, What is This Stock Market Thing Anyway?

We've all heard of the stock market and probably have... Read More

Selling Strategies - Setting a Stop Loss

Sometimes the best way of lowering exposure to risk is... Read More

Commoditizing the world

Let's discuss commodities; with the latest Enron situation, it is... Read More

Frog In The Pot

You remember the story about the frog that was put... Read More

Investing in Dividend Paying Stocks

I was recently interviewed for a press release through a... Read More

Understanding the Bulls and the Bears

If you've ever flipped on the television to CNN Financial... Read More

Is Active Trading The Answer?

One of the main reasons many of us get into... Read More

led parking top led manufacturers Pete's produce ..
led parking top led manufacturers Pete's produce ..