I Love To Lose Money
Well, not really. What I mean is I don't mind losing a small amount when I have to sell a stock or mutual fund that is going down or taking away the profit I have made. During this past 3 years I have made money each year because I was not afraid to sell. The great secret that Wall Street does not want investors to know is all about selling, not buying.
The recent headlines scream"10 Stocks To Buy Now", "100 Best Mutual Funds For 2003", "Make 25% With These Safe Stocks" and "Now Is The Time To Buy". All are either stupidity or wishful thinking. Brokers and financial planners don't want you to find out that they don't know either so they come up with great stories about the equities they recommend. Unfortunately, when the stock or fund heads down it becomes one of those buy and hold situations and they tell you that you are "in for the long haul" and "the market always comes back". I hope that by now you have learned this is not true.
When there is a secular bear market, as I believe we are in now, it could be many years before we get back to "even". Last year 96% of all stock equity mutual funds lost money and the average fund lost 21%. These are times when the only safe place for money is in cash ? a money market account. For the previous 3 years money in your mattress outperformed the stock market by 40% and for lots of folks much more. Here is one your broker will not tell you ? Cash Is A Position.
The first thing you must learn about investing is how to protect yourself from losses. I mean big losses. When I was a floor trader on the exchange I lost on about 40% of my trades, but I never lost much. I came to love those little losses because I still had almost all my money available to find a better position. One that would make money.
Almost all of the magazine writers, talking heads and brokerage analysts are professional losers. It is easy to prove because they never tell you where to sell what they are telling you to buy. If you don't go in with a plan to protect your money it is like a general who goes into battle with no plan for retreat should he find he couldn't win the battle. One of the simplest money savers is the 10% stop. It you buy a stock or no-load mutual fund you should not take more than a 10% loss. This will leave you with 90% of your money that could find a real winner. The small losses will never break you. It is sitting with a loss that gets bigger and bigger and bigger is the one that will ruin you.
Learning to love the little losses will make you rich.
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
|
|
|
|
|
|
|
|
Bad News is Good News
For weeks, no, months we have been bombarded with nothing... Read More
Investment Attorneys and Garbage Stocks
How is it possible that trash Companies are posting less... Read More
Again With the Bubbles?
A few years back ? it seems like an eternity... Read More
Trading Tips No 5: Stock Trading Curve Drawdown and Commitment
All stock trading and investing methods must deal with the... Read More
The Problem With Hedge Funds
Are hedge funds a suitable investment for you? Hedge funds... Read More
Bollinger Bands Strategies
The Bollinger Band theory is designed to depict the volatility... Read More
My Stock - Right or Wrong
We all know the expression, "My country, right or wrong",... Read More
Forecasting the Stock Market
Every day I see in the financial section of newspapers... Read More
Gold Fever
Right now there doesn't seem to be any "gold fever".... Read More
Mutual Fund Honor Roll ? Buy High, Sell Low by Chasing Performance
Buy high and sell low -- It's not a typo.Millions... Read More
Stock Market Course .... Day Trader Online Seminar ... Can You Generate Profits Trading from Home?
When it comes to stock market trading it PAYS to... Read More
Time Out
Are you paying any attention to your retirement savings? Do... Read More
Patterns
The Law of Chaos is the theory of random unpredictable... Read More
The Secret to More Winning Trades is as Simple as Avoiding This Common Mistake
If you're a normal human being, your need to feel... Read More
Different Ways of Buying Stocks
Let's say you are interested in this one company. You... Read More
The Bottom?
Every day I hear someone on CNBC proclaim that "this... Read More
When Should I Sell?
People are always asking me when should I sell my... Read More
How to Evaluate Load vs. No Load Mutual Funds
If you have been dealing with mutual funds for any... Read More
Hot Stock Trader: How to Pick Momentum Stocks with Ease and Simplicity
Most stock traders know that momentum trading can be a... Read More
Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others
When it comes to stock market trading it PAYS to... Read More
Mutual Fund Expense Lies
When purchasing mutual funds we are cautioned to read the... Read More
Social Insecurity
Just about everything you have been told about Social Security... Read More
More Window Dressing
Two weeks ago I wrote about what the Securities and... Read More
Staying Sane While Wall Street Crashes
Everybody is riding the Wall Street Roller coaster. Even if... Read More
Wall Street Paradigm
In 1960 an engineer working for a watch company in... Read More
Defining a Long-Term Investment in the Stock Market
For some "long term" would mean holding a stock position... Read More
Hold Em and Fold Em
When most analysts, financial planners, fund specialists and investors try... Read More
Stuff
I continually hear from economists, talking heads, other market letter... Read More
Attitude Is [Almost] Everything
I often play a little game with myself when I... Read More
The Secret Method to Selecting a Winning Trading System
Every successful trader has a winning system. There are of... Read More
Structured Settlement; Lawyers in NY and Mutual Funds
Minority Report the movie may not be far off if... Read More
VooDoo Training For the Stock Market
If you go to Haiti or other places in the... Read More
Stock Market Investing: Knowing When (and when not) to Sell
One of the greatest challenges of investing in stocks is... Read More
Dont Spend Another Dollar on Business Opportunities Until You Read This
With an insecure job market, overworked employees, insufficient retirement savings... Read More
Understanding the Bulls and the Bears
If you've ever flipped on the television to CNN Financial... Read More
Market Psychology
Today we are inundated with tons of information about the... Read More
Frog In The Pot
You remember the story about the frog that was put... Read More
Roller Coaster
I love roller coasters. The steeper the better. High and... Read More
Trading For A Living - Part 1
There can't be many traders who haven't at least considered... Read More
Mid-Cap Stocks: Asset Class with an Identity Crisis
Much like the middle child, mid-cap stocks have long struggled... Read More
What is Involved in Peak Performance Trading?
There is so much involved in developing peak performance, that... Read More
Ignore Stock Market Talking Heads
You should ignore analysts on TV, the radio, the newspaper... Read More
Trading Tips No 6: The High Cost of Low Cost Stock Market Information
It has been said that low cost or even free... Read More
What is a Mutual Fund?
Ever wondered what is a mutual fund? A mutual fund... Read More
Value Investing: Selecting From The Bargain Bin
Picking a beaten-down stock requires a different kind of selection... Read More
Online Broker Trade History Not Doing the Job
Let me start by saying that...Most online brokers do not... Read More
Investing Basics - Stocks, Mutual Funds, Real Estate & Online Investing
Have you ever thought of investing? Do you have a... Read More
Stops Make Money
During the day I watch CNBC-TV, the stock market channel.... Read More
A Good Fund Manager
Every Wall Street analyst, financial planner and broker will tell... Read More
How to Pick Winning Stocks
There is nothing more exciting than finding an undervalued stock... Read More
Selling
The stock market has been going up for more than... Read More
Investing in Stocks and The Game of Monopoly
To begin, you might look at playing the stock market... Read More
Hedge Fund Advertising
Have you seen all those big full page ads for... 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
8 Penny Stocks to Avoid
There are many good penny stock investments available, which could... Read More
Wall Street Paradigm
In 1960 an engineer working for a watch company in... Read More
Parachute Investing
Ever jumped out of an airplane? It's OK if you... 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
Some Good News for A Change
Before we get into all the good news out there,... Read More
Risk Control
Everything you invest in has risk so you want to... Read More
Basics of Stock Market
Financial markets provide their participants with the most favorable conditions... Read More
Low Tide
When you stand on the ocean shore and watch the... Read More
Outsourcing
It's about time someone spoke the truth concerning outsourcing. The... Read More
Market Timing?
The recent criminal fiasco in the mutual fund industry is... Read More
Stock Trading Diversification
This is the continuing story of our two imaginary traders,... Read More
Stocks & Mutual Fund |