Wall Street has been preaching the doctrine of Buy and Hold forever. The worst part about it is the small investor (and some big ones) actually believe it. Brokers and financial planners believe it, but when you show them they can get a better return by timing the market they just say, "It can't be done". They are either lazy or stupid.
Most brokers have not learned their trade - investing. Webster says that means putting money into something (stocks) for the purpose of obtaining an income or profit. When people look at their brokerage statements these days they must wonder where their broker went to school. Investors could have done better with a dartboard.
Brokers are not taught to make money. They are taught all the regulations that come out of Washington that must be followed so the brokerage company will not be sued. To my knowledge none of them are taught the basic fundamentals of increasing customers' wealth or protecting the customers' capital from loss.
Brokerage houses hire people to do reports about companies. They call them analysts, but today those jobs have deteriorated into snow jobs to get people to buy stock in a particular company. When you read the report you will find it very professionally done with pretty pictures and graphs and charts. Wow! I'll buy that. And a few months later you will wish you hadn't. When you have a loss the standard reply is, "Don't worry. You are in for the long haul. The market always comes back". In your lifetime? Today there are hundreds of stocks that have lost 50% to 90% of their value and there is absolutely no hope they will ever recover those losses. But?.you are in for the long haul. You now have the Buy and Hold philosophy.
Why do so many people cling to this doctrine?
You have a stock you bought for $40 per share that went up to some profitable number and now is down below $10/share. You're out 75% of your money. You are waiting for it to go back up so you can get out "even" and I will tell you "even" is a loser.
Many years ago I heard a story about how they used to catch monkeys in Africa. A hole was made just big enough for the monkey to get his outstretched hand in a hollowed out coconut shell. Fruit and sweets were placed inside. The monkey put his hand in and gripped the goodies, but could not remove his clinched fist. It refused to let go even when the hunter came to put him in a cage. All the monkey had to do was let go of the candy and he could have escaped.
Many investors are the same way about the stock they bought. They won't let go. The investor does not want to admit he was wrong. You are not wrong until you sell - just broke. Small losses will not hurt you, but holding on can put you in the poverty cage. Buy and Hold conventional wisdom will break you. Learn to let go of the losers quickly and you will preserve your capital.
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
Lincoln Stretch rentals Alsip ..The Law of Chaos is the theory of random unpredictable... Read More
Look back over the years and try to remember how... Read More
One of the big advertising kicks today from mutual funds... Read More
From the book 'The Stockopoly Plan' by the author Charles... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
After finding the price of a particular stock, usually the... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
When will the stock market stop going down and start... Read More
04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
Every Wall Street analyst, financial planner and broker will tell... Read More
An investor can find and research the best stock on... Read More
As an investor you will want to check out any... Read More
I use the P/E ratio as a secondary indicator for... Read More
It is commonly reported that the stock market averages about... Read More
I was recently interviewed for a press release through a... Read More
Every publicly traded company is required by the SEC(Securities and... Read More
Have you seen all those big full page ads for... Read More
A stock market index is a statistical measure of changes... Read More
In November of 2000 when the NASDAQ was trading at... Read More
If you're a normal human being, your need to feel... Read More
It takes a total mental commitment to the task. It... Read More
The single most expensive stock market trades are those made... Read More
THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More
The Surgeon General of the United States says that smoking... Read More
Western Springs shuttle limo ..The stock market can present you with a lot of... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
Have you seen all those big full page ads for... Read More
I would like to share with the reader an article... Read More
When we go to the circus we see a trapeze... Read More
Several times each month I am solicited by various market... Read More
For weeks, no, months we have been bombarded with nothing... Read More
The stock market has not been very kind to your... Read More
The Macedonian Stock Exchange (MSE) is not operating successfully. True,... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
Minority Report the movie may not be far off if... Read More
Options trading can increase the profits you make when trading... Read More
Because you don't feel too sure about which stock or... Read More
The stock market has been in an up trend for... Read More
It has fallen upon the consumer to make our economy... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
For the last few weeks we have seen the stock... Read More
We keep hearing about this bear market and that the... Read More
In 1960 an engineer working for a watch company in... Read More
Wall Street has been preaching for years and years to... Read More
Refuse is a serious issue in any society, about as... Read More
It looks like the market is ready to start up... Read More
Money management starts with protecting your capital, realizing profits and... Read More
Stocks & Mutual Fund |