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.
Wood Dale Chicago prom limo .. Lockport Chicago limo O’HareThe debate rages all over Eastern and Central Europe, in... Read More
One of the great "secrets" of successful people is discipline... Read More
Profitable day traders recognize that momentum trading is among the... Read More
Time to look back2004 is over, now we are in... Read More
Any online investor / trader seeks an excellent off or... Read More
I read a comment by a forum member on another... Read More
Every day I hear from the "experts" on CNBC-TV and... Read More
On Monday, November 25, 2000 Investor's Business Daily listed on... Read More
If you were to find that you had some severe... Read More
AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More
The fight continues to rage among traders who use technical... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
The trash business in its efforts to cook their books... Read More
If you have not back tested your trading system, you... Read More
Dollar cost averaging is one of the most popular ideas... Read More
We all know that emotions control every decision that an... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
How often have you come across an advertisement or e-mail... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
Let me start by saying that...Most online brokers do not... Read More
During the month of January the Dow Jones Industrial Average,... Read More
In my opinion, due to the volatility of stock market... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
Starbucks earnings are up again and so is their stock... Read More
If you are a baby boomer, time is not on... Read More
Antigo wedding limo ..To begin, you might look at playing the stock market... Read More
Just 30 years ago the stock market was a shadow... Read More
One of the great "secrets" of successful people is discipline... Read More
No, this is not a symbol for some Latin number.... Read More
If you have been dealing with mutual funds for any... Read More
Outlined below are some of the advantages and disadvantages of... Read More
Wouldn't it be nice if you were only in the... Read More
For the last 12 years we have seen the Japanese... Read More
When it comes to buying a stock or mutual fund... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
Stock investment advice is easy to find. Do you get... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
For years I have been saying you must have a... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
Before you embark upon a journey of trading stocks or... Read More
The big bad bear is stirring again. So far he... Read More
There are major differences between trading stocks and trading futures.... Read More
What! Me worry?Many of you remember the cover of MAD... Read More
For the year 2000 we have seen hundreds of mutual... Read More
Stock trading remains a very competitive field and the stock... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
I don't know what kind it is, but I saw... Read More
If you're a normal human being, your need to feel... Read More
Every broker and financial planner will tell you that you... Read More
Money: the most charged word in the planet. It means... Read More
Stocks & Mutual Fund |