Let's first define insanity. It is doing the same thing over and over and expecting a different result. And that is what most investors do and they can't understand why they are not able to make money in the stock market.
Do these investors need a psychiatrist, a psychologist, a talk with their minister or none of the above? I know, you think they should talk to their broker or their financial planner. Believe me, folks, these two are part of the problem and not the solution.
If they knew the answers everyone would be rich. Let's go back and look at who taught these mavens how to invest. The Wall Street brokerage houses taught them or rather did not teach them the most basic rules of the game. Why? Because brokerage houses want you to buy (for commission) and they do not want you to sell even though that means another commission. There are two basic reasons they don't want you to sell and it has nothing to do with that one selling commission.
If you sell you might take your money out of your account and that is one of the things the Maul Street crowd never wants to happen, but the most important is they make money when your account is invested. It is not a lot, but it in a nice steady 1% or more. You are their unspoken collateral in the worldwide money shuffle.
Any broker who suggests a customer sell is usually chastised in some way or just plain fired. A broker who allows large sums of cash to accumulate in customers accounts is told to invest (?) it or hit the road. The house (that's the brokerage firm) does not want to see customers with big cash balances although there are times when that is exactly where they should be. Remember 2000 to 2003? During that three year period wouldn't it have been better for your account to have had no stock or fund positions?
Brokers or financial planners are not taught simple methods to protect customer funds. And I mean simple. Too many folks during the 2000 debacle lost 40% of their money and more. There was absolutely no reason for this if basic money management techniques were instituted.
Customers could be made aware that they should not give back more than 10%, maybe as much as 15%, of their portfolio value when the stock market goes in the tank. That occurs on a regular basis. Declines in equities of 20% to 40% happen regularly and no customer should be mesmerized into holding during those periods.
During the 2000-2001 period there were less than 3% recommendations by brokers to sell and those sells were after the stock had crashed about 80% to 90%. It is too late then. Your money is gone. If brokers and financial planners had been taught to advise people to place 10% stop loss orders their retirement accounts they would be much fatter today.
Stop doing the same thing over and over again because of bad advice. Learn to sell when your position goes negative. Don't be one of the insane.
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
Alexis limo rentals ..Caught in a whirlpool and being sucked under. No life... Read More
For years investors have been taught to look into the... Read More
If you were to find that you had some severe... Read More
Forget making a profit; instead focus on the income provided... Read More
The higher the market goes the more confusing are the... Read More
Several times each month I am solicited by various market... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
To become a successful trader you must have some kind... Read More
One of the basic laws of physics is that a... Read More
Picture one of those clubs where only the real heavyweights... Read More
It looks like we have now entered a new bull... Read More
We all know that emotions control every decision that an... Read More
Ever have one of those sample boxes of candy? Each... Read More
Are hedge funds a suitable investment for you? Hedge funds... Read More
An investor can find and research the best stock on... Read More
Mutual funds by definition are a mixed bag of stocks,... Read More
1. Do not spread your money too thin.My friend has... Read More
Every publicly traded company is required by the SEC(Securities and... Read More
Should the market turn against you, it is important that... Read More
I often play a little game with myself when I... Read More
Analyzing growth stocks is an important focus for any investor.... Read More
Recently I watched my favorite football team lose a vital... Read More
As the man said, "I've got some good news and... Read More
You probably have been told that options are risky. Even... Read More
This is the continuing story of our two imaginary traders,... Read More
car service from Midway Alsip ..All stock trading and investing methods must deal with the... Read More
If you go to Haiti or other places in the... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
How do you invest? What do you really pay? At... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
If you are serious about making and keeping money by... Read More
Let's go into the details of why non-indexed mutual funds... Read More
Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More
The higher the market goes the more confusing are the... Read More
I am taking the time to help others learn the... Read More
The Law of Chaos is the theory of random unpredictable... Read More
At some time in your life you have been on... Read More
There are red lights, green lights, blue lights and spot... Read More
It is difficult to make money in a bull market,... Read More
I mean it when I say that. While plastic silverware... Read More
It has often been said that there is only two... Read More
Do you have a financial planner? Does one of your... Read More
A recent cartoon in my daily newspaper showed two guys... Read More
It has fallen upon the consumer to make our economy... Read More
I often play a little game with myself when I... Read More
One of the basic laws of physics states that a... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
One of the things people are always asking me is... Read More
Refuse is a serious issue in any society, about as... Read More
Have you ever thought of investing? Do you have a... Read More
Stocks & Mutual Fund |