Enron Cure

Let's hope you did not have any of the Enron stock. Maybe you know someone who did and lost everything, but you certainly might know several people who owned stock that lost almost everything. They probably aren't talking about it.

According to Investor's Business Daily newspaper there are 1,387 companies that lost more than 90% of their value from the highest point during the last 5 years. That is almost as bad as Enron except the folks that own this junk have hopes that someday their stock will go back up. And pigs can fly.

Do you realize that if a stock loses 50% from its high it must gain 100% to get back to the old high? And there are literally thousands of stocks that fall into that category. The people that own these dogs are waiting for them to rally so they can get out "even". What this means is that the stock has an effective cap or ceiling on it's price. Each time it sticks its head up it will meet with thousands of folks who will sell. The chance of it ever getting back to the old high is almost nil, never, nada, zip. From my experience as a professional floor trader on the exchange I can tell you it will take a minimum of 5 years of repeated rallies before the investors who are waiting to get out are finally exhausted.

There is a better plan. Why would anyone buy something and let it go against them 60 or 80%? Why do investors believe the greatest Wall Street lie of Buy and Hold? Psychologically people don't want to admit they are wrong. Your broker tells you you don't have a loss until you sell. Believe that and I have a nice bridge in Brooklyn I will sell you.

If you consider yourself a conservative investor then you must set limits on how much you are willing to lose if the stock you buy does not go up and instead goes down. One of the best rules of thumb is about 10% either from where you bought it or from its most recent high. That 90 dollar Enron stock would have been sold at about $80 and you would have a nice profit instead of a loss.

Your broker will discourage you from putting in a loss limit order called a stop-loss because then he will have to watch it which he won't. You see, and I know you know this, there is only one person who cares about your money and that is you.

Setting small loss limits when you buy something and following up a winner with a stop-loss so you won't give back profits you have made are the way to guarantee that your investments will grow every year.

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

[email protected]; 1-888-345-7870

In The News:

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IDFC Tax Advantage (ELSS) Fund - Regular Plan NAV: IDFC Tax Advantage (ELSS) Fund - Regular Plan-Growth Equity Factsheet  Economic TimesObjective: The scheme seeks to build a diversified portfolio comprising of stocks of companies with strong fundamentals that are available at reasonable ...
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Firms Vanguard founder Jack Bogle admires  Business InsiderJack Bogle made hundreds of thousands of dollars in competitor T. Rowe Price, one of three firms he said he admires in his new book.
Prepare for the stock market’s next big downturn before it happens  MarketWatchMonitor the market's key vital signs for signs of trouble ahead.
Fund managers ready to go shopping after sharp correction in stocks  Moneycontrol.comMutual funds that were holding around 8-10 percent cash level in their equity portfolio are likely to purchase shares of companies in banking and financial ...
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Five stocks that mutual funds think can outperform  Economic TimesA volatile month gave fund managers a chance to cherry-pick stocks.
Is your mutual fund buying or selling stocks too much?  LivemintA mutual fund scheme's turnover ratio tells you how frequently its fund manager buys and sells the underlying stocks. Typically, higher the turnover ratio, more ...
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Small- and mid-cap mutual funds open doors again, but should you invest?  LivemintL&T Emerging Businesses Fund and DSP Small Cap Fund have allowed *fresh* mutual fund investments, taking advantage of a continued correction in small- ...
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Value focussed MF are cutting their exposure to Indian stocks. What about you?  Moneycontrol.comAs valuations climb, the funds have chosen to stay light on Indian stocks and exposure to bonds and arbitrage has gone up.
New stock ideas boost equity mutual fund portfolios  LivemintIt is imperative for mutual fund houses to beef up their research capabilities, to be able to identify more winning new ideas.
Investing in equity mutual funds versus investing in shares: Which is better?  Economic TimesThe final goal for all stock investors is the same: to get superior returns. However, in terms of what you do, there are two completely different routes.
Mutual funds that destroyed most investor wealth in the September selloff  Economic TimesThe recent selloff in the stock market has raised fears of a rush for redemption in mutual funds.​
Why your mutual fund earned you less than Nifty in recent market rally  Economic TimesThe more the number of stocks in an index, the weaker is its performance.
Is it a good time to invest in small-cap mutual fund schemes?  Economic TimesDespite the slide in the Nifty Smallcap100 index, fund houses seem to be placing faith in small-cap funds again. Should investors take the cue?
Mutual fund holdings in IT stocks touch all-time high  Economic TimesMumbai: Fund managers are betting big on the IT sector, on the back of an improving global macro environment, depreciating rupee and rise in IT spends.
Are mid and small-cap mutual funds holding too many illiquid stocks?  Economic TimesLiquidity has been scarce in Indian capital markets in recent weeks. Mutual funds have also not been spared the pain, with liquid and money market funds ...
Investing in stocks needs deep understanding of markets  LivemintDirect investing into individual stocks requires deep understanding of the markets and continuous involvement into investing.
Mutual fund managers bought & sold these 20 stocks in May  Moneycontrol.comRelative valuations are attractive and around average, but midcap valuations are still looking stretched despite the recent drawdown, Morgan Stanley said in a ...
Investing in mutual funds? Diversify to reduce risks and enhance returns  Moneycontrol.comIn the worst of the times for stock markets, individuals invested across the asset classes are less hit as compared to investors betting all their money on stocks.
How stocks picked by mutual funds over 2014 to 2017 have performed  Economic TimesWhile the most wanted stocks of 2014 and 2015 have done well, the recent picks have disappointed.
Bleeding mutual funds: Should you go back to good old fixed deposits?  Moneycontrol.comAre you worried about the losses on your investments in mutual fund schemes? You are not alone. There are many investors who dumped their good old fixed ...
Four Strategies For Managing A Portfolio Of Mutual Funds  InvestopediaNow that you've built your portfolio of mutual funds, you need to know how to maintain it. Let's talk about how to manage a mutual-fund portfolio by reviewing four ...
Top stocks bought and sold by mutual funds in June 2018  IndiainfolineInvestors should focus on longevity to create wealth. We advise investors to stay invested in those stocks whose growth story is still intact.
HDFC AMC's Stellar Listing | Should you invest in the stock or its funds?  Moneycontrol.comHDFC AMC made a bumper debut at the stock markets last week making its investors richer by over 65% on day one.
HDFC AMC, Reliance Nippon stocks fall over 9% after Sebi caps expense ratio of mutual funds  Business TodayThe stocks of asset management companies (AMCs) fell in trade today on fears of lower revenues after market regulator Sebi capped expense ratio for mutual ...
Domestic mutual funds are selling these smallcaps and midcaps in hordes. Check out why  Economic TimesNEW DELHI: And you thought midcaps and smallcaps have been under pressure over the past three months because of the Sebi reclassification, requiring ...
These 10 stocks make up over one-third of entire mutual fund portfolio in India; check full list  The Financial ExpressEven as Sensex and Nifty continue their strong rally driven by a cheer in blue chip stocks, just 10 top names make up a whopping 34% of the entire mutual fund ...
5 strategies for investing in mutual fund in the current market to get good returns  Moneycontrol.comMutual fund investing is all about ascertaining your goals and setting out to reach them.
Here are top buys and sells by mutual funds in August when Sensex, Nifty hit record highs  Moneycontrol.comAmong largecaps, HDFC AMC, Sun TV Network, TVS Motor, Vedanta and Tech Mahindra topped the August buying list of top 10 mutual fund houses which ...
Some international funds are giving around 40% returns. Should you invest?  Economic TimesInternational mutual funds are topping the return charts. The category has returned around 20 per cent in one year. Should retail investors bet on these schemes ...
Choose your mobile app wisely to invest in direct mutual funds  Moneycontrol.comSome mobile apps are not updated on regular basis. Often there may be errors in the stocks portfolio of several schemes.
IL&FS downgrade to hit 35 MF schemes as well  Economic TimesMUMBAI: ICRA has downgraded the debt of IL&FS to a level below that considered investment-grade for mutual funds, putting the spotlight on asset managers ...
Best value-oriented equity mutual funds to invest in 2018  Economic TimesEven as the stock market stumbles along nervously, many investors are looking for tools to navigate the volatile times in the market. And suddenly everybody is ...
Mutual funds sell financial stocks the most as markets soared in January  MintMutual funds locked in gains in financial stocks the most among the top stocks in January, taking advantage of the run-up in the pack and record high levels in ...
Top 10 large, mid and smallcap stocks which fund managers bought & sold in September  Moneycontrol.comFears of a liquidity crunch following the IL&FS crisis hit the mutual fund industry in September. Cash plans, or liquid funds, were the worst hit.
Should I cut down my stock allocation and invest more in mutual funds?  Economic TimesMy risk appetite is moderately high and my investment horizon is 10 years. Please review my portfolio. I am investing in the following mutual fund schemes:
Mutual fund investment: What to do when stock market crashes  Times NowWith regard to the mutual fund investment, should investors alter their strategies or should pull back their funds out of the schemes at the time of stock market ...
Auto ancillaries, consumption stocks top buy lists of MFs  Economic TimesAs the turmoil in mid- and small-cap shares in May tested investors ' nerves, mutual fund managers armed with money from SIP flows made their purchases ...
Mutual funds' AUM plunges by Rs 2.11 lakh crore in a month  Economic TimesThe drop in the asset base is mainly due to an outflow of Rs 2.3 lakh crore from MF schemes.
Want to invest in ‘value’ stocks like Buffett? Look at these funds  Economic TimesValue investing is a strategy to spot stocks trading below their intrinsic values.
Benefits of asset allocation in mutual funds  Economic TimesWith macros looking weak and stock market indices at a new high, financial planners believe it is important for investors to follow the principle of asset allocation.
What Is a Mutual Fund? Pros, Cons, Types and How to Invest  TheStreet.comKeep hearing about mutual funds but don't really know what they are? No sweat! TheStreet breaks down what a mutual fund is, the different kinds, and how to ...
Five basic formats of equity mutual funds you must know before investing  Moneycontrol.comIs it the right time for you to invest in mutual funds? Choosing the right mutual fund in one's portfolio is not an easy task. Here are the five basic formats of equity ...
Do not make these 7 mistakes while investing in mutual funds  Moneycontrol.comNever forget that you are investing because you have to achieve your financial goals. Investing without a goal is akin to travelling without a destination.
10 mutual fund options that could be good bets as markets trend higher  Moneycontrol.comInvestment advisors feel this is time for caution and that investors should veer more towards funds with exposure towards large-caps or those that are multi-cap ...
Are you worried about fall in stock markets? 5 do's while reviewing your stock portfolio  Moneycontrol.comKeep aside the seasoned investors, most investors do lose track of their portfolios, especially when the market is in a bull run.
How much do mutual fund managers invest in their own schemes?  Moneycontrol.comEver since SEBI mandated mutual fund houses to disclose how much fund managers, directors of the asset management company and other key employees ...
Smallcap watch: 2 stocks that have been big draw among mutual funds  Economic TimesTwo smallcap outsourcing players from the consumer electrical and appliances (CEA) space — Dixon Technologies and Amber Enterprises — have been ...
Top stocks bought and sold by mutual funds in April 2018  IndiainfolineMutual funds received record-breaking inflows of Rs6,690cr into the mutual fund industry via SIP in April 2018. During FY18, the mutual funds received Rs67 ...
6 mistakes that small investors make when stock market is doing well, interest rates are rising  Economic TimesThe biggest mistakes happen when markets are doing well. In many cases, the SIP returns are in the red.
List of best mutual fund portfolios as per your risk appetite  Moneycontrol.comYou can build a portfolio of mutual fund schemes based on your risk profile.
How to build your mutual fund portfolio from scratch  Moneycontrol.comYou need to know that there is no such thing as a "perfect mutual fund portfolio". There can be numerous reasonably good portfolios, and there's no ...
Retail investors hit by Manpasand fiasco: Are mutual fund managers vetting stocks properly?  Economic TimesInvestors in Manpasand Beverages have been left with a bitter aftertaste with the free-fall in the drinks maker's share price. Shares of Manpasand Beverages ...
How SIPs help investors buy low and sell high despite unpredictability of stock market  Economic TimesSystematic investment plans (SIPs) are the best way to invest in mutual funds. The benefits come as much from psychology as from maths.
Top stocks bought and sold by mutual funds in Feb 2018  IndiainfolineSince the market has entered in the phase of consolidation, investors should focus on the longevity of investments. Retail investors can follow the actions of fund ...
Five things to check while comparing mutual funds  Moneycontrol.comYou should always understand the parameters through which you can compare and filter mutual funds out of the large universe of offerings.

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