Parachute Investing

Ever jumped out of an airplane? It's OK if you have on a parachute. Pretty dumb if you don't.

Every buy any stocks, mutual funds or Exchange Traded Funds? It's OK if you know how much you are willing to risk. Pretty dumb if you don't.

Parachute investing is buying an equity with a parachute so you won't risk all your money or, better yet, give back the profit you have made as the stock or fund went up and then goes down. If you bought that hummer at $12 per share and during the past couple of years seen it go up to $52 you don't want to give back that nice profit, do you? With a parachute you can save most of it. How?

When you invest in any stock of fund you must know how much you will risk before you buy it and how much of the profit you are willing to give back when it turns down. Take that beauty at $12. Instead of going up it went down. Are you willing to agonize as it drops to $5? If you had a parachute you would have jumped out of the plane before it crashed. If you had an exit strategy for your stock you would have sold it before you lost a big chunk of your cash.

The secret of a safe investment is an exit strategy. When you bought Mr. Twelve Dollars you shook hands and told him I'd like to be your friend, but if you change your name to Ten Dollars I am leaving. Maybe that that is not very nice, but nice doesn't cut it in the investment world.

Mr. Twelve Dollars said I am going up and I want you for my friend. Please follow me and if I falter you can leave and we will part friends. Now that makes sense. You trail along and after it goes to $52 it does falter. Do you know where you are going to leave or are you going to ride it go back down to $12? In other words do you have your parachute on?

That parachute is your continuing exit strategy that is in place every day. In the investment community it is called an open trailing stop loss order. Any broker can put this in place for you. You might be lucky enough to have a broker who knows where to place stops, but unfortunately there are not many of them.

The brokerage industry does not teach its employees (brokers) how to protect customers' money. If that is the case you might want to use the old standard 10% rule. Have the broker place an open stop every Friday at 10% of the closing price of that day as it closes higher. Never lower the stop loss. Brokers hate this as it makes them work, but that is what they are there for and that is how they earn their commissions.

With your parachute you can always protect your original cash purchase from a big loss and as your stock advances you can lock in profit as the stock advances.

Every investment should have a parachute.

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

Alexis limo rentals ..
In The News:

Who needs roads? The WindRunner aircraft was designed specifically to haul massive wind turbine blades, some of which are over 459 feet long.
A Google DeepMind team has developed an artificial intelligence system that can play video games like a human and take native language commands from players.
Four of the largest school boards in Ontario, Canada have launched lawsuits against TikTok, Meta, and Snapchat, claiming that they have impacted students' thinking and behavior.
Finalists for the inaugural Women’s Prize for Nonfiction, aimed at addressing the gender imbalance in nonfiction publishing, were unveiled on Wednesday.
Tech guru Kurt "CyberGuy" Knutsson breaks down whether the government is watching citizens and what they can do to protect online privacy.
A benchmarking group for artificial intelligence has released new results evaluating the speed of hardware in running AI applications and responding to users.
Sierra Space’s Dream Chaser spaceplane provides a glimpse into the future of space travel. Traveling to space may become a part of everyday life.
The new European Hyperloop Center in the Netherlands aims bring in a new era of transportation. The center will use a steel tube as a proving ground for testing the new vehicle.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
While it may be incredibly tempting to have a “go with the flow" mindset like the rest of your vacation, your technology definitely should not be compromised while traveling.
Have you ever accidentally deleted an app from your iPhone that you’ve already paid for? Don't worry. We’ve got a trick that will help you get it back without having to buy it again.
Apple's new Journal app has raised privacy concerns among Apple's userbase. Tech expert Kim Komando examines social media rumors and explains what steps to take to protect yourself.
Although Facebook has denied that our phones listen to us, they do have other ways of finding out what we are talking about, listening to and searching for.
With the integration of OpenAI technology, Figure 01 has taken a significant leap forward, showcasing the potential of robots to understand and interact with us on a personal level.
Port Ellen, newly reopened whisky distillery in Scotland, is using SmokeDNAi technology to understand mouth-feel and flavors during the whisky maturation process.
Telly, a smart TV firm, is promising to give out their 4K 55-inch TV for free. What must you give in return? The innovative, yet potentially unsettling, answer might shock you.
The moment a spam invite hits your calendar, it’s like an uninvited guest at a party. So, what do you do? Show it the door.
Identity thieves are now targeting children and are making large sums of money by exploiting children's identities, possibly hurting their financial future.
There's a clever way to change the notification sounds on your Android without having to look at your screen. Kurt "CyberGuy" Knutsson explains.
If your bank accounted has been hacked, there are a number of steps you can take to prevent it from happening again. Kurt "CyberGuy" Knutsson explains.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
The Wave House, a data center in Heidelberg, Germany, is the the largest 3D-printed building in Europe. Its walls were built in about 140 hours.
Some government agencies around the world are struggling to meet their staffing goals when it comes to hiring artificial intelligence experts.
Google Maps' recent upgrades have introduced real-time ETA and turn-by-turn directions to your phone's lock screen while you are traveling.
Kat Cammack says AI could disrupt the 2024 election. A report says shared AI image tools generate election disinformation in 41% of cases and voting disinformation in 59% of cases.

Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market

In a previously written article, we expanded the use of... Read More

The Golden Goose is Sick

It is finally catching up with them. The brokerage companies... Read More

Overseas Investing: Going Against the Mainstream

TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More

Learn to Calculate a Stock?s Pivot Point

Stocks breakout from properly formed bases everyday but many investors... Read More

Is Your Garage Full Of Junk?

I have a 2-car garage. There are nice shelves on... Read More

Buying Stocks and the Importance of Correct Timing

An investor can find and research the best stock on... Read More

Duck

Duck! No I don't mean a quack, quack. I meant... Read More

Stock Analysis

I receive emails from Morningstar. This company provides statistics and... Read More

DIY Portfolio Management

Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More

Prospering with Mutual Funds: How Anyone can ?Afford? an Investment Advisor

Recently I was invited to appear on a live CNNfn... Read More

Paddle Your Canoe

At some time in your life you have been on... Read More

Why Buy and Hold?

Since I can remember, and that's a long time ago,... Read More

Choosing A Fund

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

The Secret to More Winning Trades is as Simple as Avoiding This Common Mistake

If you're a normal human being, your need to feel... Read More

Online Investing & Online Stock & Share Trading: Difficulty in Taking Stop Losses in the Market

This is an extract of an article which was first... Read More

Investing Basics - Stocks, Mutual Funds, Real Estate & Online Investing

Have you ever thought of investing? Do you have a... Read More

Stock Market Investments

If there is one term over-used when talking about making... Read More

Boiler Room 7/17/00

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

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

What the SEC Really Thinks About Mutual Funds!

Let's go into the details of why non-indexed mutual funds... Read More

Its Better

Question: How does it get better when it gets worse?Last... Read More

You Wont Like This

Why? Because I am going to shatter your conventional wisdom... Read More

Play another Day

Money management starts with protecting your capital, realizing profits and... Read More

Economists #2

Economists know more about how the fragments of society work... Read More

Making Outsized Returns in the Stock Market - Using the Dow Theory

The Dow Theorycharles h. dowcharles h.... Read More

car service from Midway Alsip ..