One Way Street

Ever turn down a street, get half way and suddenly realize it is one way and you are going the wrong way? Is that the way you feel when you look at your stock brokerage statement?

In either case don't panic. You can get out of that one way street by carefully backing out. Recouping your stock market losses also means you must back out. Many people lost 50% of their investment in the last year because they were going the wrong way and could not back out. You must admit you are doing it wrong and stop immediately just as you did in your car. In a car you have been taught there is a reverse gear so you know how to get out of this bad situation. No one has ever taught you how to extricate yourself from a losing position in the stock market - certainly not your broker and most financial planners don't know either.

Let's look first at how you got here. You bought stocks or mutual funds without an exit plan. I'll put it away "for the long haul" and won't worry about it. The nicest thing I can say about that type of investing is "STUPID". You have an exit plan for the one way street; now you need an exit plan for your remaining money. It is the same. Back out. You have to acknowledge you are doing it wrong. Hiding from this mistake means you will continue to lose money. Do you want to do that or would you rather find a solution to not losing money again?

O.K., you have looked in the mirror and you say I am ready. Look at that brokerage statement and sell every loser you have. Every one! This takes emotional courage. Do it. Now you have cash. Don't do anything until you have a plan and that plan has an absolute, set-in-concrete foundation: never buy any stock or mutual fund unless I limit my risk from the day I purchase it. One of the best rules is a 10% Good Until Cancelled Stop-Loss Order. Brokers hate these because it means they will have to check your account daily. Don't believe him when he says, "Don't worry, I will watch your account". He won't. It is not his money.

Using this very simple technique you will never lose large sums of money. Also as your stock moves up you raise (never lower) the stop-loss order each week following it 10% under each Friday's closing price until you are eventually taken out of the position with a profit or, at worst, a small loss. The stock itself will tell you when to sell when it turns weak.

You have been driving for a lot of years and have gotten out of some tight places. Now you know how to not lose money in the stock market. Back out. Do it today. Put in your stops.

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

In The News:

Best Mutual Funds: Seeking Top Tiny Stocks  Investor's Business Daily
What is a mutual fund?  Economic Times

True Investment Road Maps

If you don't know where you are going any road... Read More

?Fears Only Enemy Is Action?

What a great statement!I just heard someone use it in... Read More

The Stock Market Investor?s Worst Enemy

Every stock market investor faces one primal enemy. An enemy... Read More

The Big Bad Bear

The big bad bear is stirring again. So far he... Read More

How To Be A Winner

Everyone who invests in the stock market wants to be... Read More

365/7/24

What does it take to be a stock trader? It... Read More

Getting Even

I know there are a lot of you out there... Read More

Advantages and Disadvantages of Mutual Funds

Outlined below are some of the advantages and disadvantages of... Read More

Low Expense Ratio

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

Buying New Issues

Has your broker been calling you recently with the "great... Read More

A Common Misconception about Stock Prices

I cringe every time I hear a novice investor tell... Read More

Good News?

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

Ignore Stock Market Talking Heads

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

The Shadow

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

Shorting Stocks ? The Basics, Part II of II

After the publication of the first part of this two... Read More

Option Spread Trading

Spread trading is a technique that can be used to... Read More

Analysts - Do They Really Know The Stock Market?

When you become interested in a stock or mutual fund... 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

Never Lose Money

Never lose money in the stock market again. Yeah, I... Read More

Dont Buy Stocks based on P/E Ratio alone

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

Pathways

During our travel down life's path we come to many... Read More

Value Investing: Selecting From The Bargain Bin

Picking a beaten-down stock requires a different kind of selection... Read More

Market Globalization

Just 30 years ago the stock market was a shadow... Read More

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

Investment Attorneys and Garbage Stocks

How is it possible that trash Companies are posting less... Read More