Humpty Dumpty the Stock Market Falls Down

Humpty Dumpty had a great fall and all the King's horsemen could not put Humpty Dumpty back together again.

The Stock Market has had a great fall and all the brokers, CEOs, analysts and politicians have not been able to get it back up again.

Oh, it will go up again, but if history has a way of repeating it will be a long time before we see it at "even". From 1920 to the present there have been 3 major bull markets lasting close to 16 years. Unfortunately, each has been followed by a bear market of about the same length of time. So far we are ending the 3rd year of the projected down cycle with only 13 more years to get to the bottom. It is a long way off.

At a recent investment seminar one of the speakers asked his large audience if they believed the stock market would be higher 5 years from now. Every one except one thought it would be. The current mindset of most investors believes this also. For the period from 1982 to 2000 (18 years, close enough) there has been a bull market. Every investor has considered himself to be a financial genius during that time. There is an old saying, "The market makes fools of us all ? sooner or later".

Unless you learn to listen to what the market is saying and not your broker, you will be able to recoup some of your losses, but probably not all. During this long-term bear called a secular bear market, your main effort will not be to make money but to keep from losing more. During a bear market the one who loses the least is a winner. You may not like what I say, but history has that strange way of doing it over and over.

Maybe I am wrong about it because "this time it is different". I hope so, but you can protect your money in your 401K or elsewhere with a simple loss limit order. Call your broker and have him place a 10% (or whatever number your prefer) stop-loss order on all your positions. That way you don't guess about where to sell; you let the market tell you when it has turned weak.

Brokers and brokerage companies hate stop-loss orders and will try to talk you out of it. Ask him if he will guarantee your portfolio. You can bet he isn't that dumb. It is your money. Once it is gone you will have very little chance of getting it back. Protect what you have left.

Don't be a Humpty Dumpty!

Al Thomas

Author of "If It Doesn't Go Up, Don't Buy It!"

Never lose money in the stock market again.

http://www.mutualfundmagic.com

---

The Cub; II

We keep hearing about this bear market and that the... Read More

Duck

Duck! No I don't mean a quack, quack. I meant... Read More

Stock Market Education; Day Trading for Beginnners; How to Pick Stocks

The trading method you employ to approach the stock market... Read More

The Secret Art of Backtesting

If you have not back tested your trading system, you... Read More

Precision Money Management

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

Cash

How many people went to a cash position this week?... Read More

The Shadow

The Shadow knows. There used to be a radio program... Read More

Trading Tips No 2: The Big Lie in the Stock Market

It is commonly reported that the stock market averages about... Read More

Your Job

There are so many kinds of work that needs to... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Investing Basics - Stocks, Mutual Funds, Real Estate & Online Investing

Have you ever thought of investing? Do you have a... Read More

Understanding the Bulls and the Bears

If you've ever flipped on the television to CNN Financial... Read More

Bull or Bear?

Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More

Top 25 Growth Funds

On Monday, November 25, 2000 Investor's Business Daily listed on... Read More

Low Expense Ratio

One of the big advertising kicks today from mutual funds... Read More

Why Stock Is More Risky Than Options!

You probably have been told that options are risky. Even... Read More

Good News?

As the man said, "I've got some good news and... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

The Club

Yesterday I received my monthly issue of MONEY magazine. This... Read More

Choosing A Fund

For years I have been saying you must have a... Read More

Stock Trading Secrets?

How often have you come across an advertisement or e-mail... Read More

Paddle Your Canoe

At some time in your life you have been on... Read More

Fools Gold

The stock market has been in an up trend for... Read More

Social Insecurity

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

Moving Averages

Every day on CNBC-TV they show a 200-day moving average... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

Eternal Sunshine

There is a current movie entitled "Eternal Sunshine of the... Read More

Time Out

Are you paying any attention to your retirement savings? Do... Read More

Ignore Stock Market Talking Heads

You should ignore analysts on TV, the radio, the newspaper... Read More

Investment Discipline

One of the great "secrets" of successful people is discipline... Read More

Price Targets

Every day in any financial publication you will find the... Read More

Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips

Day trading is all about making buy and sell decisions.... Read More

Big Buildings Can Mean Big Economic Disaster

AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More