When it comes to buying a stock or mutual fund most people act pretty quickly. There are some who will take the time to get a report from Morningstar (it is worthless) or get reports from their broker (also worthless) or even do a search on the Internet (if you know what you are doing). When your broker says "buy" you buy and when a friend gives you a "tip" you buy.
Any fool can buy. It is the wise man who knows how to sell. One of the old masters of the market Bernard Baruch used to say, "I sell too soon", but he died a multimillionaire.
There is a reason folks are slow to sell. They fall in love with their position and know all the reasons why they should hold on. "My broker said it will come back". And pigs can fly.
With all these symptoms that have turned into syndrome diseases like acid reflux for which there is one of those purple pills to cure you in a hurry. When you buy a stock or mutual fund that doesn't go up or, worse yet, goes down we need one of those purple pills. People have contracted Inertia Syndrome.
The symptoms are terrible. Each day as you look on the financial page of your paper and see your stock has gone down another point your stomach begins to act up and you need one of those pills. You keep putting off going to the doctor (broker) to tell him to sell so your symptoms will go away, but you don't. Things continue to get worse and worse until your money is almost all gone. Then you decide to sell. By then it is too late. What should you have done?
When it comes to your health you can change your diet and stop eating all those lovely sweet gooies that have no nutrition. When you own a stock like that and you lose sleep the best thing to do is to get rid of it. Maybe you have a profit and you are seeing it disappear. There is a way to relieve yourself.
Most people don't know when to sell so the best thing to do is have the market tell you. It is very easy. The first rule for making money in the market is to cut your losses short. As soon as you buy any stock or fund you must decide how much you are willing to risk. Five percent? Ten percent. Fifteen percent? That number should be calculated from the closing high of the move or never lower than where you bought it. If you paid $50 per share your risk should be no more than $5.00 per share.
To overcome Inertia Syndrome put the medicine in play as soon as you buy your position by using an Open Stop Loss Order. By limiting your risk you will never have a really bad belly ache.
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
efficient cleaning crew Northbrook ..Have you been listening to the talking heads on CNBC-TV?... Read More
Wall Street's watchword has always been diversification, but what does... Read More
I mean it when I say that. While plastic silverware... Read More
IT'S REMINISCENT OF THE OLD children's tale about an old... Read More
After the publication of the first part of this two... Read More
To become a successful trader you must have some kind... Read More
Investing in long-term financial vehicles give you the most gains... Read More
Professional stock options traders use the term lean to refer... Read More
As a novice trader, you'll often feel the need to... Read More
Refuse is a serious issue in any society, about as... Read More
It is difficult to make money in a bull market,... Read More
Most people think the stock market is a zero sum... Read More
There are so many kinds of work that needs to... Read More
During the month of January the Dow Jones Industrial Average,... Read More
Several times each month I am solicited by various market... Read More
I have been trading for several decades and was an... Read More
Ever wondered what is a mutual fund? A mutual fund... Read More
When you become interested in a stock or mutual fund... Read More
Every successful trader has a winning system. There are of... Read More
It is commonly reported that the stock market averages about... Read More
After some forty years of banking and investments, I retired... Read More
Recently I was invited to appear on a live CNNfn... Read More
I don't know what kind it is, but I saw... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
cleaning lady near Wilmette ..Spread trading is a technique that can be used to... Read More
I cringe every time I hear a novice investor tell... Read More
Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More
The Dow Theorycharles h. dowcharles h.... Read More
You probably know the story of Sherlock Holmes and the... Read More
If you've ever flipped on the television to CNN Financial... Read More
Checked your 401K lately? Going back to about a year... Read More
For the last few weeks we have seen the stock... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
Sometimes the best way of lowering exposure to risk is... Read More
You may have wondered why your mutual funds have been... Read More
You have decided to buy some stock or mutual funds,... Read More
Sometime around 1980, can't remember exactly, there was a flight... Read More
Investing in long-term financial vehicles give you the most gains... Read More
Jack and Jill went up the hill to fetch a... Read More
It has been said that low cost or even free... Read More
Outlined below are some of the advantages and disadvantages of... Read More
We've all heard of the stock market and probably have... Read More
Index Fund Trading can be one of the most profitable...or... Read More
Let's first define insanity. It is doing the same thing... Read More
The trash business in its efforts to cook their books... Read More
Alfred Winslow Jones started hedge funds in 1949. He was... Read More
The single most expensive stock market trades are those made... Read More
The greatest stock market myth is the idea that investing... Read More
Mutual funds were created with the idea that one person... Read More
Stocks & Mutual Fund |