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.
limo prices to midway Crystal Lake west of Randal .. Lockport Chicago limo O’HareThree little pigs went to the market to stock up... Read More
We learnt the following the hard way! If any of... Read More
Did you know you can make money (and a lot... Read More
Suppose your position has made a big move and you... Read More
Mutual funds were moderately successful in creating a presence in... Read More
This is an extract of an article which was first... Read More
On Monday, November 25, 2000 Investor's Business Daily listed on... Read More
Mutual funds were created with the idea that one person... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
It looks like the market is ready to start up... Read More
The greatest stock market myth is the idea that investing... Read More
The stock market has been in an up trend for... Read More
Do you own any mutual funds? In an IRA or... Read More
You probably know the story of Sherlock Holmes and the... Read More
How is it possible that trash Companies are posting less... Read More
Let's hope you did not have any of the Enron... Read More
We have two candidates for president that have really different... Read More
After finding the price of a particular stock, usually the... Read More
Let's go into the details of why non-indexed mutual funds... Read More
Jack and Jill went up the hill to fetch a... Read More
What is leverage?Here is a definition of leverage from an... Read More
What can I expect to make my first year of... Read More
When the stock market is going up and all your... Read More
The broker told me not to sell because the mutual... Read More
Because you don't feel too sure about which stock or... Read More
taxi o'hare Auburn ..That sounds like good advice doesn't it? Don't lose all... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
When it comes to stock market trading it PAYS to... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
With the stock market stubbornly refusing to settle down and... Read More
Should the market turn against you, it is important that... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
Duck! No I don't mean a quack, quack. I meant... Read More
How many times have you said to yourself, "I'd like... Read More
From the book 'The Stockopoly Plan' by the author Charles... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
Every day I hear from the "experts" on CNBC-TV and... Read More
After the publication of the first part of this two... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
Wall Street has been preaching for years and years to... Read More
Financial markets provide their participants with the most favorable conditions... Read More
Unfortunately, most of you who are reading my column are... Read More
There has been great condemnation recently because China has been... Read More
Investors who exclusively use broadly diversified, no load mutual funds... Read More
Economists know more about how the fragments of society work... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
To become a successful trader you must have some kind... Read More
You've decided to try your luck at trading stocks or... Read More
Stock investment advice is easy to find. Do you get... Read More
I mean it when I say that. While plastic silverware... Read More
Stocks & Mutual Fund |