Just Say NO to Your Stock Broker

We have all heard that slogan that started back when Nancy Reagan was in Washington. It was all about drugs. Now I want to remind you this can be your slogan when you get one of those telephone solicitations from a strange broker or even your own stockbroker who is acting a little strange. By that I mean he wants you to buy something.

Currently we are in an advancing stock market and we all hope it is going to go higher and higher. None of us, definitely including me, knows for sure where it will end up this year. Barron's, the weekly financial publication, has declared on their front page that "THE BULL IS BACK". They are also guessing. But it makes you feel good.

It makes me wonder when I study the fundamentals of the economy how they have come to this conclusion. Unemployment just had an uptick, most companies have yet to declare a dividend, the American dollar is losing value against many foreign currencies, manufacturing capacity utilization is still low and shows no signs of increasing, balance of trade is way out of whack and on and on.

Yes, there is some good news. Many companies are "beating the estimates". That means they are showing greater sales and profits than the brokers on Wall Street thought they would have. This is good press and usually has the effect of pushing stock prices higher. Many of these better profits are at the cost saving of laying off hundreds if not thousands of workers. And worst of all we don't know if these profits are true. Many are profoma meaning management is guessing.

If you are one of those people who hopes the market will go back up so you can get out "even" you are going to find that hope is the most expensive word in the dictionary. But what can you do about it? You are now being given the opportunity to save what is left of your retirement account. On any stock or mutual funds you have it would be a guess to say this is the place to sell. The smart thing is to listen to the market and do what it tells you.

When any equity is advancing you want to set up a trailing stop-loss order and move it up each week as your stock advances. Suppose you bought a stock at $100/share and watched it drop to $15. Pretty disheartening! It has now risen back up to $30 and your broker has assured you it will continue to rise. Maybe. But what if it doesn't?

Tell your broker to put in a stop-loss order about 10% below its current price. He will say you don't need to. This is where you just say 'NO'. Brokers don't watch any but their biggest and most active accounts. He must do as you ask according to regulations.

Put in a stop-loss order today. Protect your retirement account with a simple 'NO'.

INVESTMENT LETTER 3 months free at http://www.mutualfundmagic.com Copyright Albert W. Thomas All rights reserved. Author of "If It Doesn't Go Up, Don't Buy It!" Former 17-year exchange member, floor trader and brokerage company owner. Copyright 2002

---

Margin Benefits are Marginal at Best

Margin is one of those things that novices find puzzling... Read More

The Dreaded Direct Question

(Please have a glass of water within reach before reading... Read More

How Eating Bitumen Made Me a Better Stock Trader

Stock market trading is a fascinating activity.There are so many... Read More

The Three Legged Stool

My paternal grandparents were born near Lake Como, Italy. My... Read More

Investing & Online Stock & Share Trading- The Stock & Share Markets are Booming But Be Warned

I had the pleasure of being invited on a friend's... Read More

How To Create Wealth In The Stock Market

First and foremost, an opportunistic strategy for creating wealth in... Read More

Effective Advice For A New Generation of Investors

CATCHING A FALLING KNIFEOne of the most common mistakes made... Read More

Day Trading the SP Futures with Initial S/R and the NYSE TICK

For instance, if the market moves up in the first... Read More

Find Your Investing Soulmate on the Jersey Turnpike

As a followup to a previous column, "Irreconcilable Differences," I... Read More

Are You An Investment Dummy Like Me?

I am good at a few things. I can certainly... Read More

The Past Does Not Equal The Future: Mutual Fund Returns!

A way that investors get ripped off and in a... Read More

Rules of Simple IRA Your Business Needs to Know

A Savings Incentive Match Plan for Employees plan, better known... Read More

Need To Trade!

You don't HAVE to be trading.As a novice trader, you'll... Read More

Lessons in Transition

Q: What have been the most successful approaches to attracting... Read More

Reasons For Joining An Investment Club

Whether you're a novice investor or an experienced stock picker... Read More

Success Trading: Yet More Basic Terminology for New Traders

In this day and age of online brokers for virtually... Read More

POOF goes your RRIF !

Some time ago I attended a seminar where participants were... Read More

Consolidation Period

The economic data reported Fri showed continued above trend growth... Read More

What If You Absolutely Positively Could Not Lose - Would You Play the Stock Market?

Seniors on fixed incomes face a unique problem. Where do... Read More

Stocks, Oil, and Bonds

A barrel of oil bounced to over $60 Thu, which... Read More

Learn How to Lose and Risk Management

One of the leading traders on Chicago Mercantile Exchange, because... Read More

Maniac Investment

Let's first understand what maniac means. According to Webster a... Read More

Making Your Investment Dollars Work for You

Investments are scary for some people, especially those who have... Read More

Day Traders and Swing Traders and Options? Maybe!

Typical day traders and swing traders look for stocks with... Read More

Beginning Investor - Investment Terms

Over the course of the past two months, readers have... Read More

Straddle Strategies in Option Trading

The straddle strategy is an option strategy that's based on... Read More

How to Analyze the Veracity of Investment Newsletters

When trying to analyze whether a promotional ad for an... Read More

Wit and Wisdom on Money, Wall Street and Success - Part #1

I love to collect quotes as they concisely promote a... Read More

Approaches to Investing

Here is a small summary of the three major approaches... Read More

Protecting the Tax Advantage of Your Deferred Compensation

The American Jobs Creation Act of 2004 imposed strict new... Read More

Trading Tips No 4: Technical Analysis The Holy Grail Syndrome

Everyone knows that the Holy Grail of investing and trading... Read More

Preparing to Invest: How to get started

Investments can be a source of great potential earnings. The... Read More

Invest To Make Money, Not To Get Rich

The technology boom of the '90s romanticized the "rags-to-riches" ideal... Read More