It looks like we have now entered a new bull phase in the stock market and I have a question for you. Will you give back the profits that you make this time as you did in 2000? You sure don't want to, but you are not going to get any help from your broker.
The investors (Not really the right term. They were gamblers.) had bought stocks and mutual funds during the 90's and seen them have huge advances. They thought they were going to retire early, buy an island in the Caribbean and drink rum and coke all day with no hassels. All of a sudden the bull was attacked and eaten by a grizzly bear. Dreams of comfortable early retirement went up in smoke as the bull was barbequed.
We saw the technology stocks and many mutual funds lose about 80% of their value. Many people did not want to open their monthly brokerage statements and I couldn't blame them. Were there any way those losses could have been avoided? You betcha, but you won't hear that from your broker.
There is what I call portfolio insurance. It doesn't cost any thing and anyone can have it at no charge. Brokerage companies don't want you to use it much less even find out about it. It is a way of protecting your cash from being eaten by that nasty bear.
While the market is going up you don't even think about any financial calamity, but history has shown as far back as you want to look that the stock market goes up and it also goes DOWN. Over long periods of time it does increase at about 6% per year (including dividends and the inflation factor). During the 90's everyone was a financial genius and saw their accounts going up about 12% per year or more. That is not a sustainable pattern. Those periods do occur and are followed by years of declining prices. You don't want to own stock then, do you?
What you have to decide is how much are you willing to give up before you decide to sell. How much of your money are you willing to risk from here where you are right now. Is it 2%, 5%, 10%, 20% or more? In 2000 we saw $200 stocks go down to $5.00. You sure don't want to take that ride again.
After you make your decision you call your broker and tell (not ask) him you want to place a trailing stop loss order of 7% (whatever) on your position. Most assuredly he will try to talk you out of doing it. That 7% (?) is your insurance that you won't have to sit through a 20%, 40% or more down draught.
He will not "watch your account". That is your money not his. If you care about it you are the only one who will watch it. Place your open stop-loss order and keep your profits.
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
one time home cleaning Highland Park ..You'd have had to be living on a desert island... Read More
This article describes the model of a natural relationship between... Read More
If you have talked to a stock broker or financial... Read More
Peter is a professional trader, Paul is not. Peter has... Read More
The Macedonian Stock Exchange (MSE) is not operating successfully. True,... Read More
One of the great "secrets" of successful people is discipline... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
I use the P/E ratio as a secondary indicator for... Read More
The debate rages all over Eastern and Central Europe, in... Read More
When the stock market is going up and all your... Read More
Who are the successful investors?There are those who follow the... Read More
Time to look back2004 is over, now we are in... Read More
There are many important things you need to know to... Read More
You have a lock on your house. You have a... Read More
The following are a list of nine things you want... Read More
One of the basic laws of physics states that a... Read More
Ever have one of those sample boxes of candy? Each... Read More
Recently I watched my favorite football team lose a vital... Read More
In 1960 an engineer working for a watch company in... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Have you bought any mutual funds this year or late... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
One of the main reasons many of us get into... Read More
It is difficult to make money in a bull market,... Read More
How many people went to a cash position this week?... Read More
licensed cleaning services Park Ridge ..Wall Street has been preaching the doctrine of Buy and... Read More
The Dow Theorycharles h. dowcharles h.... Read More
All of the talking heads have been telling us that... Read More
∙ Make every investment in the stock market a long-term... Read More
Stock trading remains a very competitive field and the stock... Read More
Recently I was invited to appear on a live CNNfn... Read More
What are you thinking when it comes to your no... Read More
Buy high and sell low -- It's not a typo.Millions... Read More
Picture one of those clubs where only the real heavyweights... Read More
To begin, you might look at playing the stock market... Read More
Starbucks earnings are up again and so is their stock... Read More
Most people think the stock market is a zero sum... Read More
One of the basic laws of physics is that a... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
What a great statement!I just heard someone use it in... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
How many people went to a cash position this week?... Read More
You may have wondered why your mutual funds have been... Read More
There are formulas for just about everything, but it has... Read More
At some time in your life you have been on... Read More
How is it possible that trash Companies are posting less... Read More
We learnt the following the hard way! If any of... Read More
There are major differences between trading stocks and trading futures.... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
In 1960 an engineer working for a watch company in... Read More
Stocks & Mutual Fund |