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

In The News:


Investor's Business Daily

IBD's Best Mutual Funds 2017 Awards | Stock News & Stock Market ...
Investor's Business Daily
Except for the Harlem Globetrotters, repeat winning is hard. Even our Best Mutual Funds 2017 Awards winners have few repeats from last year.
Should you invest directly in equity or via mutual funds?Economic Times
Are you risk averse? Give hybrid mutual funds a chanceFinancial Express

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Motley Fool

The Worst Funds for Your 401(k)
Motley Fool
And all three of these options are far cheaper than the average U.S. stock mutual fund's expense ratio of about 1.25%. However, notice that there is a 65-basis-point difference in gross expense ratio between the highest- and lowest-cost funds on the ...
Mutual fund group aims for fee transparency with 'clean shares'San Francisco Chronicle

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Bloomberg

ETFs Are Giving Mutual Funds a Run for Their Money
Bloomberg
Mutual fund ownership of equities is at its lowest level in nearly 13 years, according to a research note from Goldman Sachs Group Inc. Meanwhile, exchange-traded funds are becoming an even bigger force in the stock market, the team led by Chief U.S. ...

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US-based stock mutual funds take in most cash in a year -ICI
Reuters
By Trevor Hunnicutt NEW YORK, March 1 Fund investors' aversion to riding the market's highs showed signs of waning as stock mutual funds attracted the most cash in a year in the latest week, Investment Company Institute data showed on Wednesday.

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Moneycontrol.com

Time to be careful: Fund managers are shying away from stocks
Moneycontrol.com
A look at the portfolio of ICICI Prudential Balanced Advantage Fund, the largest mutual fund scheme In India investing in stocks reveals that the exposure to stocks have been cut over last one year. The net equity investments of this scheme are down to ...

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Barron's

ETFs Chasing Mutual Funds as Stock Buyer
Barron's
Mutual funds' outflows since last year have driven their equity ownership to a nearly 13-year low, according to Goldman Sachs. ETFs, meanwhile, are growing by leaps and bounds as a stock market force. “Corporations and ETFs will continue to drive ...


Mutual funds invest over Rs 2000 crore in stocks in February
Economic Times
Mutual fund managers purchased stocks worth a little over Rs 2,000 crore in February --- making it the seventh straight month of positive inflow in equities --- on sustained participation by retail investors. Fund managers have been investing ...

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The Indian Express

Mutual Funds' exposure to bank stocks hits record Rs 1.2 lakh crore in February 2017 end
The Indian Express
Mutual Fund managers seem to be bullish on bank shares as they raised their allocation in the sector to an all time-high of over Rs 1.2 lakh crore at the end of February, primarily on account of cheaper valuations. In comparison, fund managers had ...

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Utility Stocks for Retirement Investors: 1 Stock, 1 ETF and 1 Mutual Fund
Investorplace.com
While utility stocks have taken it on the chin lately with the Federal Reserve starting to raise rates, the reality is, they still make sense for retirement investors. Utilities For Retirement Investors: 1 Stock, 1 ETF and 1 Mutual Fund. Source: 401(k ...


CNBC

Why mutual funds could be on their way to another lousy year
CNBC
The improvement comes amid multiyear lows in the tendency of stocks to correlate up and down together, as well as an elevated level of dispersion, or the difference between returns for various sectors. Stock pickers in actively managed mutual funds ...
Stock pickers lift performance in battle of the benchmarksFinancial Times

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