The Shadow knows. There used to be a radio program called The Shadow where the hero, Lamont Cranston, the Shadow, would overcome the shadowy forces of doom by clouding the vision of those around him. "Who knows what evil lurks in the hearts of men" was their intro line. They were great shows and you can still find them on the Internet.
The stock market is kind of like the shadow. As you walk along with the sun at your back you cast a shadow. No matter which way you move the shadow stays ahead. Fast, slow, right, left. It doesn't make any difference.
An equity market is the shadow of the economy staying out in front following every twist and turn. Depending upon the height of the sun the shadow may be long or short. You can see it either as a long term or short term prediction of the passage.
If you did not know what a shadow was you would not realize it is telling you something about where you are going. If you see the shadow fall across a hole you know you must step over or around it depending upon its width and depth. The path of our economy is predicted by the direction of the stock market. When things are good and everyone is making money the shadow seems to go up and when the economy slows (for whatever reason) the shadow darker and heads down.
At this time (11/04) the sun is shining brightly and the shadow stretches out long and friendly before us. The stock market is going up and everyone is feeling good, but we also know that tomorrow storm clouds may appear making our shadow seem to be a monster black image that hides the potholes in our path.
When that occurs we must be ready to put on our raincoat to protect what we carry through life. One of the most important is the money we have put aside for the time we wish to depart the path, sit by the road and contemplate all the beautiful things we have brought. That means we must guard against losing what we have created and not let the shadowy rain cloud wash them away.
That raincoat for your investments is an exit strategy for your portfolio. Without a plan to protect your assets it will be too easy to seem them washed away. This does not mean diversification which is what brokers want you to do. It means a plan to exit (sell) stock and mutual funds that are going down. This can be done with a simple percentage stop-loss order for your stocks and a mental stop loss for funds.
Brokers never want you to sell even though there may be a commission involved because once you money is in a money market neither they nor the brokerage company makes any money. You and only you care about your money so you must protect it. Think about an exit plan now and put it into place.
Do not become a victim of the dark shadow.
About The Author
Al Thomas
F*R*E*E investment letter www.mutualfundmagic.com
Author of best seller "IF IT DOESN'T GO UP, DON'T BUY IT!" Never lose money in the market.
Copyright 2004 Albert W. Thomas All rights reserved.
Former 17-year exchange member, floor trader and brokerage company owner.
personalized cleaning services Des Plaines ..Who are the successful investors?There are those who follow the... Read More
Every successful trader has a winning system. There are of... Read More
Wall Street has been preaching the doctrine of Buy and... Read More
Professional stock options traders use the term lean to refer... Read More
One of the greatest challenges of investing in stocks is... Read More
One of the main reasons many of us get into... Read More
What the heck am I talking about?It is often said... Read More
Regardless of the fact that the world's stock markets have... Read More
When it comes to 401k's there is an overabundance of... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
If you want one.And I don't recommend any broker with... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
Since I can remember, and that's a long time ago,... Read More
As one of my regular readers you know I have... Read More
Recently I watched my favorite football team lose a vital... Read More
An investor can find and research the best stock on... Read More
There is a famous cliff on the ocean in Acapulco... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
It has fallen upon the consumer to make our economy... Read More
Ever wondered what is a mutual fund? A mutual fund... Read More
There are so many kinds of work that needs to... Read More
If you have been watching the stock market at all... Read More
How do you invest? What do you really pay? At... Read More
I often hear from people, "I don't trade. I invest.... Read More
When it comes to mutual funds, there is a lot... Read More
family-safe home cleaners Arlington Heights ..You remember the story about the frog that was put... Read More
For years investors have been taught to look into the... Read More
If you have been watching the stock market at all... Read More
After finding the price of a particular stock, usually the... Read More
Ever done any whitewater rafting or canoeing? Long periods of... Read More
Just 30 years ago the stock market was a shadow... Read More
Hedge current portfolio positions and gain access to capital resources... Read More
The following are a list of nine things you want... Read More
Wouldn't it be nice if you were only in the... Read More
We need a rabbit!This was a pretty horrible week for... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
In November of 2000 when the NASDAQ was trading at... Read More
You should ignore analysts on TV, the radio, the newspaper... Read More
A 'stock option' is a contract between two parties giving... Read More
"If you don't know where you are going, any road... Read More
It is commonly reported that the stock market averages about... Read More
The date October 13, 2000 will forever be embedded in... Read More
The Shadow knows. There used to be a radio program... Read More
It has fallen upon the consumer to make our economy... Read More
Minority Report the movie may not be far off if... Read More
How is it possible that trash Companies are posting less... Read More
One Saturday morning, while he was sitting at his computer... Read More
Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
Suppose your position has made a big move and you... Read More
Stocks & Mutual Fund |