Complacency

During the month of January the Dow Jones Industrial Average, usually referred to as the DOW, had an almost 1,000 point range, most of it down and the average investor has yawned and said 'so what, this has happened many times before'.

Is there any reason to worry now?

The terrible event of September 11 shocked investors who sold heavily and then watched the market climb back to where it was on September 10. The investing public as well as many professional money managers now believe that soon this year we will see the DOW move back up for another bull market like we had in 1999. Let's hope they are right, BUT suppose they are wrong. What will happen to the stocks and mutual funds you own now?

What will be the valuation of those equities if the DOW smashes through the 8,000 level and goes even lower? Do you have anything in place that can protect you from such a catastrophe? Is there a solution to that potential disaster?

Yes, there is. And it is very simple.

If you believe that the market is going lower you could sell every stock you own and buy some bonds, but no one knows for sure. If the stocks and mutual funds you own go up you will kick yourself. Here is a sure-fire way to protect your money. Place an open stop-loss order of about 10% under its most recent low price. That way if it goes up you will be able to move the stop up to lock in additional profit and if it goes down you will not take a bigger loss. This is how every professional trader makes money. You allow yourself to take big winners and only small losses.

The biggest problem with doing this is YOU. Huh? Yes, it is the fact that few people want to sell even with a small loss. They prefer to sell with a big loss. I'm not joking.

I know the story all too well. Investors say, "When it goes back up, I'll sell and get out even" Or "It can't go any lower. I'll hold on." How about this one, "How can I sell it now when it has dropped this far?" Folks, things aren't going to get any better. If you had had that stop-loss order in you would have been out at a much higher price. With mutual funds you cannot put in a stop order so you must call in your order when it breaks the price barrier you have set. Do not rely on your broker to do it for you and do NOT let the broker talk you out of it unless, of course, he wants to guarantee in writing that it won't go any lower. And pigs can fly.

You cannot become complacent and believe the great Wall Street lie that the market always comes back. It may, but it might not be before you retire. Only you can protect your money.

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:

How the Stock Market Works | Investing 101  U.S. News & World Report
How to Invest in Preferred Stock ETFs  U.S. News & World Report
The 25 Best Mutual Funds of All Time  Kiplinger's Personal Finance

Stealth Bull

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

The 401(K): How The Insider Has Stolen Your Retirement!

Mutual funds were moderately successful in creating a presence in... Read More

Planning Your Dive and Diving Your Plan ? Trading!

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

You Wont Like This

Why? Because I am going to shatter your conventional wisdom... 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

Investment Research - The Dalbar Study

Very few people, even professionals, have heard of the Dalbar... Read More

Investment Capital Gains

Have you bought any mutual funds this year or late... Read More

Market Success

Who are the successful investors?There are those who follow the... Read More

Its Snowing

The Winter Games for the Olympics are coming up soon... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 2

Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More

Trading vs Investing

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

How Commodity Trading Differs from Stock Trading

There are major differences between trading stocks and trading futures.... Read More

The Importance of Using Stop Loss Orders When Spread Trading the Financial Markets

A Guide to Using Stop Loss Orders Stop losses are... Read More

How to Read an Annual Report

Every publicly traded company is required by the SEC(Securities and... Read More

How to Find Value in No Load Mutual Fund Investing

What are you thinking when it comes to your no... Read More

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Market Timing

Every broker and financial planner will tell you that you... Read More

Chart Reading

As an investor you will want to check out any... Read More

Staying Sane While Wall Street Crashes

Everybody is riding the Wall Street Roller coaster. Even if... Read More

E-mini Day Trading - Day Trading for Beginners - Stock Market Timing Software

I mean it when I say that. While plastic silverware... Read More

Lemmings Are Gathering

Before they go over the cliff to their destruction these... Read More

Stock Trading Secrets?

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

Online Investing & Online Stock & Share Trading: Difficulty in Taking Stop Losses in the Market

This is an extract of an article which was first... Read More

Bull or Bear?

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

Risk Control

Everything you invest in has risk so you want to... Read More