In 1960 an engineer working for a watch company in Switzerland discovered that a small crystal would vibrate at a constant rate. He found this was so accurate that it could be used to calibrate time so he took it to company management and said it would make an entirely new kind of watch that had no springs and no gears. They could not imagine who would want such a thing. Swiss watches dominated world commerce. "Why change?", they said. The bosses did not even bother to patent it.
The inventor took his new idea to a commercial trade show, set up his booth and tried to interest manufacturers to produce his new kind of watch. Of the thousand people only 2 were willing to try it ? Texas Instruments and Seiko Corp. of Japan. Ten years later the Swiss manufacture of watches had shrunk to 10% of it former production.
It took a complete change of thinking to produce this new model. Most people are rooted in the old way they have always done it and are reluctant to change. The new model, the new paradigm is refused.
Now I want you to think about another paradigm. This time a model for your investment portfolio.
Wall Street has been teaching since time began to Buy and Hold. When your stock or mutual fund heads south you are not to worry about it because "the market always comes back". But my question is, "In your lifetime?" There are thousands of stocks that go up than go down and never recover. You might have some of those in your bank vault.
Here is the change in thinking you need to incorporate. Place a stop-loss order about 10% or 15% below the price. This is especially true when you first buy. The most important thing every professional investor does is protect his capital. You never need worry about how much you will make. Your major concern is how much can I lose if this turns in a mangy dog. After you have owned this gem and it does go up then you can replace the stop-loss order to a higher level and continue to do that until you are finally stopped out (sold out) with a nice profit when it starts down.
Your broker will not want to do this for one very simple reason. He then becomes responsible to see that the order is executed because if it isn't he will have to make up the difference out of his pocket. He will actually have to watch your account. If he gives you a hard time then find another broker.
Customers like you are not taught this simple method of thinking about the stock market. It requires a change of thinking. There is a better way than how the big brokerage houses tell you. This paradigm will allow you to make more money because when you are sold out and have cash in your account you will be able to find a better stock or mutual fund.
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
recurring maid service Wilmette ..If you were to find that you had some severe... Read More
What the heck am I talking about?It is often said... Read More
Being wrong is OK, but let's not carry it to... Read More
Robert Rodriguez likes to buy stocks at their lows. When... Read More
There is a famous cliff on the ocean in Acapulco... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
You must take the time once a month to review... Read More
Most advisors will tell you they can beat the market.... Read More
Everything you invest in has risk so you want to... Read More
I use the P/E ratio as a secondary indicator for... Read More
There are so many kinds of work that needs to... Read More
People are constantly asking me why is the stock market... Read More
Just about now everyone is confused as to which way... Read More
Analyzing growth stocks is an important focus for any investor.... Read More
Sometime around 1980, can't remember exactly, there was a flight... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
This is the continuing story of our two imaginary traders,... Read More
Do you own any mutual funds? In an IRA or... Read More
Investing in long-term financial vehicles give you the most gains... Read More
"If you don't know where you are going, any road... Read More
It has often been said that there is only two... Read More
The higher the market goes the more confusing are the... Read More
There are many important things you need to know to... Read More
Let me start by saying that...Most online brokers do not... Read More
last minute cleaning help Highland Park ..Sometimes the best way of lowering exposure to risk is... Read More
I mean it when I say that. While plastic silverware... Read More
If it walks like a duck, quacks like a duck... Read More
Hello Inflation, it has been awhile, I see you on... Read More
I made my very first investment in the stock market... Read More
Are hedge funds a suitable investment for you? Hedge funds... Read More
So you're started trading, you bought some positions with your... Read More
Wall Street has been preaching for years and years to... Read More
During the month of January the Dow Jones Industrial Average,... Read More
For weeks, no, months we have been bombarded with nothing... Read More
Caught in a whirlpool and being sucked under. No life... Read More
I was devastated!I just couldn't believe it. I was 10... Read More
When it comes to stock market trading it PAYS to... Read More
When the stock market is going up and all your... Read More
If you have not back tested your trading system, you... Read More
Wall Street has been preaching the doctrine of Buy and... Read More
What is the Series 7 Exam? If you... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
This is a guide to the different types of mutual... Read More
What does it take to be a stock trader? It... Read More
What! Me worry?Many of you remember the cover of MAD... Read More
A stock market index is a statistical measure of changes... Read More
It is wonderful to be alive in the information age.... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Alfred Winslow Jones started hedge funds in 1949. He was... Read More
Stocks & Mutual Fund |