Selling

The stock market has been going up for more than 7 months and many investors who held on through the big crash of 2000 are seeing their portfolios get back some of what had disappeared. Is now the time to sell those equities that are 'even' with what you paid for them? No.

The reason I say "no" is because that is a guess and to be a successful investor you don't want to be guessing. That is a sure way to go broke. Then what is a better way? When you talk with a broker he never advises you to sell. In that case you could be sucked into another huge downward move. There must be a way.

Yes, there is. You let the market tell you. No, you don't have to be clairvoyant. When you buy any stock or mutual fund the first question for your broker should be, "When do I sell?" If he says you should hold on "for the long haul" I definitely recommend you fire him and find someone who knows how to protect your capital. If you buy a stock or fund for $40 per share you must know immediately how much you are willing to risk (lose) if that equity starts down instead of up. The same applies to giving back any of the profits you have earned.

When you are playing poker you don't put more money in the pot when you have a mixed suit 2, 5 and 10. The best thing to do is fold.

Over the last few months almost everyone has seen his stock and funds go up and he thinks he is a genius for hanging on. Don't confuse genius with a bull market. So what do I mean let the market tell you? It actually is very simple. You place an Open Stop Loss Order with your broker on all your stocks. You determine the risk and place the loss limit at that point. Some people use 10% and others may limit their loss to 7% and yet others to 15%. That is your risk quotient.

You will find that if your stock or fund is sold as a result of the stop loss that in 4 to 6 months that equity will be lower than where you got out even if it went higher for a short period of time. When a stop is executed don't look back. Find another equity or keep your money in cash in a money market account. Cash is a position. Sometimes it will make you more money than owning any stock especially when the market is headed down.

People become confused by Wall Street into thinking that buying right is the way to make money. Wrong! The secret of success in the market is a well disciplined exit strategy. Know when to hold 'em and know when to fold 'em.

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

---

Successful Trading ? Taking Profits - Part 2

Suppose your position has made a big move and you... Read More

Evaluation II

As I said in Part I everyone in the insane... Read More

Precision Money Management

This article describes the model of a natural relationship between... Read More

Picking Mutual Funds to Outperform the Market

With over 6,000 mutual funds available, it may be tempting... Read More

A Stock Market Investment Strategy

I feel that an investment strategy in the stock market... Read More

Do You Know What is the Single MOST Critical Mistake in Trading the Stock Market??

Well maybe that's overstating it a little, but it's certainly... Read More

Is Active Trading The Answer?

One of the main reasons many of us get into... Read More

Buy Low - Sell High

Now where have I heard that before? I know. It... Read More

The Inside Scoop on Mutual Fund Rip Offs

The bear market that showed up at the end of... Read More

Prosperity

It has fallen upon the consumer to make our economy... Read More

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds... Read More

Stealth Bull

If you have been watching the stock market at all... Read More

Laws and Efficiencies and Theories of Diminishing Returns

The basis of diminishing return discussions surround such simple notions;... Read More

Social Insecurity

Just about everything you have been told about Social Security... Read More

Planning Your Dive and Diving Your Plan ? Trading!

A colleague of mine just returned from a scuba diving... Read More

Long-Term Investment In Todays Market?

The stock market is very unstable at this time going... Read More

Stocks Options Trading

Let's assume that you want to make some serious money... Read More

How Covered Calls Turned a Trader Around

Sidney felt sick as she looked at her latest OptionsXpress... Read More

Performance Funds

Mutual funds are doing more and more to discourage investors... Read More

The Stock Market - How Just One Question Will Tell You All You Need To Know About Your Stock Broker

Last time we looked at the real performance of the... Read More

You Don?t HAVE To Be Trading

As a novice trader, you'll often feel the need to... Read More

Mousetrap

The spring-loaded rat catcher is the ultimate low-tech device invented... Read More

The Elephant

Four blind men were asked to give a description of... Read More

Acapulco - The Stock Market Dives

There is a famous cliff on the ocean in Acapulco... Read More

Stock Market Investing Odds

The greatest stock market myth is the idea that investing... Read More

Why Change Funds?

On November 17 I bought 7 different mutual funds and... Read More

A Stock Market Investment Plan that Never Lets You Down

The bulls and bears of the stock market are both... Read More

Dont Buy Stocks based on P/E Ratio alone

I use the P/E ratio as a secondary indicator for... Read More

Mutual Fund Commissions

You have heard about a particular mutual fund from a... Read More

Whitewater Stock Market

Ever done any whitewater rafting or canoeing? Long periods of... Read More

Good Stock Market Tip; Good Return!

Forget making a profit; instead focus on the income provided... Read More

Outsourcing

It's about time someone spoke the truth concerning outsourcing. The... Read More

Trading vs Investing

I often hear from people, "I don't trade. I invest.... Read More