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:

Mutual Fund Corner: Should I invest in stocks or mutual funds?  CNBCTV18Get all your mutual fund related queries answered by our expert, Anand Dalmia, on our show Mutual Fund Corner.Get latest Business online at cnbctv18.com.
Best large & mid cap mutual funds to invest in 2019  Economic TimesThe re-categorisation and rationalisation of mutual funds by Sebi last year created some new categories, including the large & mid cap mutual fund category.
Under pressure to perform well, MFs bought & sold these stocks in December quarter  Economic TimesNEW DELHI: With back clearly to the wall after a not so pleasant year for equities, mutual funds (MFs) went about recasting their portfolios a bit in the December ...
Fund managers' picks: Large, mid & smallcap stocks that MFs bought, sold in Dec  Moneycontrol.comMF assets declined to Rs 22.8 lakh crore in December 2018 from Rs 23.4 lakh core in Nov 2018 on the back of moderation in the flows in equity funds and ...
Mutual funds may need smart bets on smallcap stocks to beat ETF show  Economic TimesSmallcap stocks could see up to ₹1 lakh cr inflow as fund managers look for potential winners: Analysts.
Remembering Jack Bogle, colossus of mutual fund industry  LivemintVanguard founder Jack Bogle turned the mutual fund industry on its head more than 30 years ago by thinking of and acting in the interest of the retail investor.
Hot and Cold Stocks of Mutual Funds in November 2018  MoneylifeIn November 2018, Axis Bank and ICICI Bank were the most preferred stocks of Indian mutual funds.
The dangers of high mutual fund inflows  LivemintIndian mutual funds have pumped about ₹1.2 trillion into the equity markets in each of the last two years.
Best mutual funds to invest in India  Times of IndiaFAQs News: Market analyst says that it would be difficult for investors to get high returns in 2018 pointing to the volatility faced by the stock market. The inv.
Large-cap and Mid-cap Stocks Top Mutual Fund Schemes Are Betting On  MoneylifeEquity mutual funds (MFs) are run by expert stock-pickers.
Mutual Fund Update: Top 5 stocks that MFs sold  Dalal Street Investment JournalMutual funds are institutional investors, the buying and selling transaction of fund houses happen in huge numbers which also affects the stock prices in some or ...
New to stocks? Try aggressive hybrid funds: Dhirendra Kumar  Economic TimesThe promise of a small cap is that they turn out to be a bonanza when they become a midcap or large cap, says Dhirendra Kumar, CEO, Value Research.
What You Owe John Bogle, Iconic American Inventor  ForbesJohn Bogle arguably did as much or more for investors than any Nobel prizewinner, although he never won one. Along with Edison and Ford, Gates and Jobs, ...
Sebi issues norms for mutual funds investments in derivatives  Moneycontrol.comCurrently, mutual fund schemes are permitted to undertake transactions in equity derivatives but cannot write options or purchase instruments with embedded ...
3 JPMorgan Mutual Funds to Buy Now  Zacks.comBelow we share with you three top-ranked JPMorgan mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy).
Berko: Do not invest in Chinese stocks, mutual funds  The ColumbianDear Mr. Berko: My wife and I are thinking of investing in Chinese stocks or mutual funds. If we were to buy stocks, we'd invest $10000 each in Alibaba, Noble ...
Sebi tweaks stock weightage norms for equity ETFs, index funds  Economic TimesIn a circular issued to all mutual funds and asset management companies, Sebi said an index used for equity ETFs or index funds should have at least 10 stocks ...
This little-known tax plan beats every other ELSS fund; should you invest?  Moneycontrol.comKnow here what is Quant Tax Plan and why it is topping the charts.
Investors pulled a record $143 billion out of active funds during December's plunge  CNBCAccording to data from Morningstar, actively managed funds experienced outflows of nearly $143 billion in December, their worst month ever.
Bogle changed investing forever with index funds, but wasn't always happy about it  CNBCJack Bogle was sure of his pioneering market invention, but he always had misgivings about what it had become. Bogle, who died Wednesday the age of 89, ...
India's stocks are hostage to US Fed rate cycle: Mutual fund giant  The New Indian ExpressWhile the US central bank's influence on emerging assets is hardly an unknown phenomenon, India's USD 2 trillion stock market has also been whipsawed in ...
4 Small-Cap Growth Mutual Funds for 2019  Zacks.comSmall-cap funds that offer good earnings potential could be your best bet amid economic tailwinds and growth projections.
India's stocks held hostage to Fed cycle, says S Naren  Economic TimesBy Ameya Karve For all the domestic drivers of India's stocks -- from oil to elections to shadow banking shakeouts -- the U.S. Federal Reserve holds the most ...
Founder of financial giant Vanguard, 89, dies  The Business TimesTHE BUSINESS TIMES Companies & Markets - JOHN C Bogle, who founded the Vanguard Group of Investment Cos in 1974 and built it into a giant mutual fund ...
Should I trade stock mutual funds for CDs?  MoneyRates.comMoving out of stock mutual funds into CDs may seem like a good way to manage risk during a volatile market, but wide swings in asset allocation could make ...
RIL first Indian private firm to post Rs 10,000 crore quarterly profit; 10 takeaways from Q3 earnings  Economic TimesNEW DELHI: Reliance Industries (RIL) on Thursday put up a solid Q3 show by becoming the first Indian private firm to cross Rs 10,000 crore quarterly profit ...
Analysis | Jeffrey Vinik Thinks He Can Beat the Stock-Picking Bots  Washington PostStock pickers are striking back. Jeffrey Vinik, who rose to fame as manager of the Fidelity Magellan Fund in the 1990s, told CNBC last week that he was getting ...
Dow Jones Futures: Netflix Stock Hit By Netflix Earnings Guidance; Stock Market Rally Moves On  Investor's Business DailyDow Jones futures: Netflix earnings guidance didn't signal much trouble for the stock market rally but did slam Netflix stock. The Netflix stock fall could lead to a ...
John C Bogle, founder of financial giant Vanguard, is dead at 89  bdnews24.comVanguard announced his death. Bogle, who had struggled with a congenital heart defect and had several heart attacks, had received a heart transplant in 1996.
Don’t overlook mid-cap stocks — they beat large-caps by a mile in the long run  MarketWatchCompanies with market values of $2 billion to $10 billion are selling at cheaper valuations than large-caps and small-caps.
Take Buffett’s Advice: 5 Vanguard Funds to Buy  Investorplace.comWarren Buffett believes index funds are the way to go for most investors, making these five 'products' from Vanguard Funds worth owning.
A Newly Reopened Small-Cap Fund Worth Considering  Morningstar.comSilver-rated Loomis Sayles Small Cap Growth boasts long-tenured mangers practicing a well-executed process.
John Bogle, Vanguard founder and index pioneer, a 'hero to investors'  The Australian Financial ReviewJohn Bogle, who popularised the low-cost index-based mutual fund as founder of Vanguard Group and insisted that most stock-picking money managers ...
Atlassian Stock Pops As Quarterly Earnings, Revenue Top Expectations  Investor's Business DailyAtlassian (TEAM) on Thursday reported fiscal second-quarter profit and revenue that topped expectations and issued mainly in-line guidance for the current ...
Stock Focus: Investors Keen on Agnico Eagle Mines Limited (NYSE:AEM) as it Makes Headlines With Moves  The Coin GuildMajor market players are buzzing over Agnico Eagle Mines Limited (NYSE:AEM) as their share price hit $39.14 at the end of the most recent trading session.
7 stocks most favoured by mutual funds over last one year  Economic TimesAs the markets hit a speed bump, stocks favoured by mutual funds appear to be safer bets.
Stock Watch: Investors Focusing on Shares of Maxwell Technologies, Inc. (NASDAQ:MXWL) as Company Makes Headlines With Moves  The Coin GuildMajor market players are buzzing over Maxwell Technologies, Inc. (NASDAQ:MXWL) as their share price hit $2.33 at the end of the most recent trading session.
Stock Watch: Investors Focusing on Shares of Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) as Company Makes Headlines With Moves  The Coin GuildMajor market players are buzzing over Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) as their share price hit $58.26 at the end of the most recent trading session.
Is your mutual fund buying or selling stocks too much?  LivemintHere are equity mutual fund schemes with the highest turnover.
Mutual funds bet big on these 30 stocks in November; do you own any?  Moneycontrol.comMF industry assets grew to Rs 23.4 lakh crore, on the back of improved inflows into liquid funds and steady equity markets.
Stock Watch: Investors Taking a Second Look at Coca-Cola Company (The) (NYSE:KO) After Recent Market Moves  The Coin GuildMajor market players are buzzing over Coca-Cola Company (The) (NYSE:KO) as their share price hit $47.57 at the end of the most recent trading session.
Institutional Investors Have Been Buying These 3 Singapore Blue Chip Stocks  The Motley Fool SingaporeThese latest institutional buying activities might be a source of ideas and inspiration for investors to take note of.
Market News: Investors Keen on Teradyne, Inc. (NYSE:TER) as it Makes Headlines With Moves  The Coin GuildMajor market players are buzzing over Teradyne, Inc. (NYSE:TER) as their share price hit $31.79 at the end of the most recent trading session.
Trend in the News: Investors Keen on Five Below, Inc. (NASDAQ:FIVE) as it Makes Headlines With Moves  The Coin GuildMajor market players are buzzing over Five Below, Inc. (NASDAQ:FIVE) as their share price hit $116.99 at the end of the most recent trading session.
Worried You're Never Going to Be Able to Retire?  Kiplinger's Personal FinanceFive common threats to your retirement (and how you can tackle them now).
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 ...
Why stopping mutual fund SIPs when stock market falls can jeopardise your financial goals  Economic TimesFear has returned to Dalal Street. Caught in a perfect storm of weak macroeconomic numbers, the IL&FS crisis and fear of more defaults, equity markets have ...
Mutual funds' exposure to banks hits 3-month low of Rs 1.88 lakh crore in Sept  Economic TimesMutual funds' holding of banking stocks declined by over Rs 21,600 crore to Rs 1.88 lakh crore in September, driven by the correction in equity markets.
Check out what top five mutual funds bought & sold during October selloff  Economic TimesNEW DELHI: Mutual funds stood resilient as industry's asset base increased to Rs 22.23 lakh crore in October in spite of a heavy correction in the domestic ...
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.​
Five stocks that mutual funds think can outperform  Economic TimesA volatile month gave fund managers a chance to cherry-pick stocks.
Shall I buy the HDFC AMC stock or mutual fund?  LivemintThe HDFC Asset Management Co. Ltd stock closed 65% up on the first day of listing over its IPO price of ₹1,100 per share. Investors who sold on day one, saw ...
When should you sell your mutual fund schemes? - Stocks and equity mutual funds are different  Economic TimesInvesting in an individual stock and equity mutual fund scheme is different. You must look at various parameters like key ratios while investing in a stock. Hence ...
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.
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.
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 TimesBy Dhirendra Kumar Hopefully, by now my columns have convinced you that most of your long-term investments should be in equity. The next question to be ...
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 ...
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.
Mutual fund lesson: What should you do in volatile markets?  Moneycontrol.comCost of investing in equities is that it is a volatile asset class- there will be times when your portfolio value will be lower than what you invested.
How your mutual funds played the balancing act during stocks crash  Economic TimesBy Bhavana Acharya The last three months has been a bumpy ride for largecap stocks. The year so far has been unkind to the midcap and smallcap set.
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- ...
Picking the best mutual fund: Are past returns relevant after re-categorisation?  Moneycontrol.comWhile selecting a scheme for investment or while deciding whether to continue with a current investment, a fund's performance track record does play a critical ...
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.
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?
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.
These 18 consistent mutual funds may help you to beat stock market volatility  Economic TimesMany equity mutual fund advisors abhor volatility in the stock market. They are always searching for ways to tackle this beast which gives them sleepless nights.
Why HDFC Bank stock is among the top picks of mutual funds  Business TodayPrivate sector lender HDFC Bank, the third-largest Indian firm by market capitalisation, is among the favourite stocks in the portfolios of mutual funds. Despite ...
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.
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.
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 ...
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.
Mutual Funds For First Time Manage More Money In Stocks Than Insurers  BloombergQuintMutual funds for the first time manage more money in equities than insurers as the last stock rout erased the gap that started narrowing after demonetisation.
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 ...
Investing in stocks needs deep understanding of markets  LivemintDirect investing into individual stocks requires deep understanding of the markets and continuous involvement into investing.
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.
Fund managers' bets: Top 10 large, mid and small-cap stocks that MFs bought in October  Moneycontrol.comMF industry assets grew to Rs 22.2 lakh crore on the back of improved inflows into equity-oriented and liquid funds.
How to Invest in Mutual Funds  The Motley FoolIf you want to understand how to pick the right mutual fund for you, you've come to the right place. In the guide below, I've put together all the major pieces of ...
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 ...
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.
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 ...
Kotak Mutual Fund is betting on these 5 sectors in 2019  Moneycontrol.comWhile current valuations are not cheap, the fund house expects a further pick-up in earnings.
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.
Should you shift from large-cap mutual funds to index funds?  Economic TimesThe index fund category of mutual fund schemes is slowly gaining traction among investors. The fortunes of index funds are changing as not only are they being ...
How diversified should a mutual fund be?  LivemintThe extent of diversification is driven by the mutual fund's strategy and the market segment it invests in.
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 ...
Top 10 wealth creator mutual fund schemes of 2018  Moneycontrol.comThe IT sector has been riding on good earnings show by the IT giants in India. The depreciating rupee is in the last few years boosted the fortunes of the ...
Mutual Funds 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 ...
Why liquidity offered by mutual funds is good for you  Moneycontrol.comYou may come across emergencies which warrant sudden requirement of cash. In such a situation, mutual funds come in handy.
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 ...
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.
Mutual Fund Investment: Should you invest in MFs when the stock market is down?  The Financial ExpressIn a situation where the stock market is down, you can actually give yourself a 'smart investor' tag by buying more units of mutual funds to benefit out of the crash.
Sebi may tighten liquid MF rules  Economic TimesBy Pavan Burugula & Reena Zachariah The Securities and Exchange Board of India (Sebi) is considering a proposal to tighten rules for liquid mutual funds ...
FIIs, MFs bet on 138 stocks in last 1 year; should you buy?  Moneycontrol.comOut of the 138 stocks which witnessed increase in weightage on a year-on-year basis, as many as 14 stocks saw a correction of 20-80 percent in the last 1 year.
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 ...
Mutual funds garner Rs 7,985 crore via SIPs in November  Economic TimesNEW DELHI: Retail investors continued to pour money in mutual fundS through systematic investment plans (SIPs) as the industry received Rs 7,985 crore via ...
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 ...
'Opt for index funds': Founder of world's largest fund company has advice for investors  Moneycontrol.comJohn C Bogle founder of Vanguard Group also said that dividends are the best friends of stock investors.
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 ...
India's Stocks Are Hostage to Fed Rate Cycle, Mutual Fund Giant Says  BloombergQuint(Bloomberg) -- For all the domestic drivers of India's stocks -- from oil to elections to shadow banking shakeouts -- the U.S. Federal Reserve holds the most sway, ...

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

Why the Majority Fail at Stock Investing

The gleam and bright lights of Wall Street lure in... Read More

Top 25 Growth Funds

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

A Stock Market Investment Plan that Never Lets You Down

The bulls and bears of the stock market are both... Read More

Big Buildings Can Mean Big Economic Disaster

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

The POWER of a Proven Stock Investment Plan

When you invest in the stock market for ever-increasing cash... Read More

VooDoo Training For the Stock Market

If you go to Haiti or other places in the... Read More

How to Pick Winning Stocks

There is nothing more exciting than finding an undervalued stock... Read More

Price to Earnings Ratio - P/E

After finding the price of a particular stock, usually the... Read More

Wall Street Paradigm

In 1960 an engineer working for a watch company in... Read More

Buy and Hold Investment Philosophy

Wall Street has been preaching the doctrine of Buy and... Read More

The Holy Grail (of Investment)

Every year I go to the Money Show in Orlando,... Read More

Stocks & Oil, Sat Jun 18th, 2005

Both the stock market and oil prices rallied recently, which... Read More

Emotional Maturity

If you are going to be a winner in the... Read More

Series 7 Exam

What is the Series 7 Exam? If you... Read More

Diversification

Wall Street's watchword has always been diversification, but what does... Read More

Dont Fight The Fed

One of the great truisms of Wall Street is "Don't... Read More

Investing in the Stock Market - When To!

Is really not as important as to how you invest... Read More

Bollinger Bands Strategies

The Bollinger Band theory is designed to depict the volatility... Read More

Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading?

Ever notice how behavior in one area of life can... Read More

Perfect Storm

Having lived aboard a sailboat for 2 years I was... Read More

Complacency

During the month of January the Dow Jones Industrial Average,... Read More

Money, Insanity and Wall Street

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

Bull or Bear?

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

Trading For A Living

How many times have you said to yourself, "I'd like... Read More