Do you have a nest egg? You know, a place you are stashing away money for the future - retirement, down payment on a house, the kids education. That kind of thing. How're you doing?
If you have been putting it in the stock market you have been watching it get smaller instead of bigger. Your nest egg is becoming an omelet instead of hatching into a wonderful creature. There are places for your money, but for the next few years you will be better off in a simple savings account or money market fund.
Stay away from the big name mutual funds. If you don't believe me have a look at what they have done with your money for the past 3 years. Most have lost about 50%, some 60% and more. Their story now is they are "cheap" and a great buy; they can't go any lower - but they probably will. Mutual funds only work in a bull market and the bull was chased back to the barn in 2000. The bear is now out of his cage and has the run of the premises. When the stock market bubble (let's call it an egg) broke 3 years ago your broker, financial planner, banker had no plan to protect your capital. None of them had ever seen a bear market and none were trained to protect customers' money. Brokers are salesmen and are not there to help you make money even though they think they are. Their employer not once has ever told them the great secret of the market. That secret - SELLING. Having been a member of the exchange and a floor trader for many years I learned how and when to sell. If you didn't you would not last very long. You would be broke.
There is a way to keep your egg from becoming fried, poached or scrambled, but your broker will not tell you. Most of them don't know and their companies don't want you to find out. Selling and putting your cash in a money market account does not make them any money.
There is a thing called a stop loss order for stocks. The simplest one is for 10%, but you can make it any amount you wish - 5%, 15%, whatever. The best time to calculate your stop is Friday or Saturday. If your stock is $40 you figure 10% or $4.00 and you call your broker on Monday morning and tell him to place a Good 'Til Cancelled Sell order at $36. As your stock advances move the stop-price up, NEVER down. This allows the market to tell you when it turns weak rather than you trying to guess when to sell. Your stock might go to $100 before you are stopped out at $90.
Now is the time to protect all your eggs with a big soft stop-loss cushion.
(c) 2005
Al Thomas' best selling 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 to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.
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