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.
Batchtown Chicago prom limo .. Lockport Chicago limo O’HareA common problem I often see when working with living... Read More
Everyone who follows the financial news has heard of mutual... Read More
One of the greatest challenges of investing in stocks is... Read More
The thinking process of the brain relating to the... Read More
It takes a total mental commitment to the task. It... Read More
One of the basic laws of physics is that a... Read More
Let's first define insanity. It is doing the same thing... Read More
If you want one.And I don't recommend any broker with... Read More
Before they go over the cliff to their destruction these... Read More
People are constantly asking me why is the stock market... Read More
Now that you have some money burning a hole in... Read More
Let me start by saying that...Most online brokers do not... Read More
You may have wondered why your mutual funds have been... Read More
For the last few weeks we have seen the stock... Read More
Let's say you are interested in this one company. You... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
Right now there doesn't seem to be any "gold fever".... Read More
It has often been said that there is only two... Read More
If you were to find that you had some severe... Read More
Economists know more about how the fragments of society work... Read More
How do you invest? What do you really pay? At... Read More
In one of my previous articles (Investing in the stock... Read More
Ever turn down a street, get half way and suddenly... Read More
Everything you invest in has risk so you want to... Read More
When it comes to mutual funds, there is a lot... Read More
shuttle from Midway Munster are ..Well maybe that's overstating it a little, but it's certainly... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
If you are serious about making and keeping money by... Read More
I was recently interviewed for a press release through a... Read More
One of the great truisms of Wall Street is "Don't... Read More
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
If you want one.And I don't recommend any broker with... Read More
A stock market index is a statistical measure of changes... Read More
We all know that emotions control every decision that an... Read More
If you go to Haiti or other places in the... Read More
Mutual funds by definition are a mixed bag of stocks,... Read More
As a novice trader, you'll often feel the need to... Read More
We all know the expression, "My country, right or wrong",... Read More
Just about now everyone is confused as to which way... Read More
There are major differences between trading stocks and trading futures.... Read More
In 1960 an engineer working for a watch company in... Read More
Every broker and financial planner will tell you that you... Read More
What the heck am I talking about?It is often said... Read More
Trading is a fascinating activity.There are so many layers to... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
Money management starts with protecting your capital, realizing profits and... Read More
Jack and Jill went up the hill to fetch a... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
IT'S REMINISCENT OF THE OLD children's tale about an old... Read More
Hedge current portfolio positions and gain access to capital resources... Read More
Stocks & Mutual Fund |