Everyone who invests in the stock market wants to be a winner. Each person's definition of a winner will be somewhat different, but there is hardly one who isn't looking for that stock that will double in price within one year.
Can it be done? Yes, but when you look at the odds you may want to find a better or maybe slower and safer way. The chance of finding that mother load is 1 in 200, about ? percent. Of the 11,000 listed securities you have a choice of 55. Even the pros don't like those odds. What makes you think you are better?
We have been in a great bull market from 1982 to 2000. Then the bubble burst. Yet the investing public continues to believe that we are going to see double digit returns every year. According to the Financial Research Corporation's study the mutual fund pros return was only 10.92% and the average investor had gains of about 8.7%. The great Warren Buffett says the bull is over and that we will be looking at a 5% return not the 12% to 15% that has occurred in the recent past.
As I mentioned in my recent column the returns for the past 126 years has only averaged 7% with 2/3 of the return coming from dividends which are about nonexistent today. Instead of looking for the rainbow with the pot of gold at the end my suggestion is to limit your losses and let your winners run. You have heard that clich? before, but have you every understood what it means in the stock market? The floor traders and hedge fund managers do not look for home runs. They look for slow and steady and never allow any major losses. The key to long term investment success is to limit your losing positions and never give back profits you have earned.
If tech investors in 1999 had followed this principle they would have kept about 80% of their profits. Wall Street says you should Buy and Hold and they have told this lie so often that it has become conventional wisdom. It is absolute stupidity. A simple trailing stop-loss order would have protected the investor's capital. Almost no broker and certainly no brokerage house recommends loss limit orders. No one is taught the basic winning concept of the market ? an exit strategy. Until that is learned you are doomed to give back your winnings and take losses when a stock doesn't go up and heads down.
Most investors have no plan as to how much money they would like to accumulate nor how to intelligently go about it. They don't know where they are going and they don't want o be late.
When you have decided how much you need to save the next important step is not what to buy, but how to exit in the event what you do buy happens to go down instead of up.
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
scheduled cleaning services Winnetka ..You may have wondered why your mutual funds have been... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
So you're started trading, you bought some positions with your... Read More
There is nothing more exciting than finding an undervalued stock... Read More
The Surgeon General of the United States says that smoking... Read More
In 1960 an engineer working for a watch company in... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
Let's assume that you want to make some serious money... Read More
Mutual funds by definition are a mixed bag of stocks,... Read More
The fight continues to rage among traders who use technical... Read More
There is so much involved in developing peak performance, that... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
A colleague of mine just returned from a scuba diving... Read More
Caught in a whirlpool and being sucked under. No life... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
I was recently interviewed for a press release through a... Read More
Stock investment advice is easy to find. Do you get... Read More
Are you paying any attention to your retirement savings? Do... Read More
When it comes to buying a stock or mutual fund... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
I use the P/E ratio as a secondary indicator for... Read More
I have been trading for several decades and was an... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
A Guide to Using Stop Loss Orders Stop losses are... Read More
The broker told me not to sell because the mutual... Read More
reliable maid service Lincolnshire ..One of the basic laws of physics is that a... Read More
If you go to Haiti or other places in the... Read More
As I have said many times before in this column... Read More
When purchasing mutual funds we are cautioned to read the... Read More
At some time in your life you have been on... Read More
One of the basic laws of physics states that a... Read More
People are constantly asking me why is the stock market... Read More
One of the great "secrets" of successful people is discipline... Read More
It's about time someone spoke the truth concerning outsourcing. The... Read More
The date October 13, 2000 will forever be embedded in... Read More
You must take the time once a month to review... Read More
When it comes to mutual funds, there is a lot... Read More
In 1960 an engineer working for a watch company in... Read More
A few years back ? it seems like an eternity... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
1. Do not spread your money too thin.My friend has... Read More
This is an extract of an article which was first... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
How can you dispel an illusion unless you look directly... Read More
It is commonly reported that the stock market averages about... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
IT'S REMINISCENT OF THE OLD children's tale about an old... Read More
I continually hear from economists, talking heads, other market letter... Read More
I'll bet with almost anyone that has stocks or mutual... Read More
During our travel down life's path we come to many... Read More
Stocks & Mutual Fund |