Humpty Dumpty the Stock Market Falls Down

Humpty Dumpty had a great fall and all the King's horsemen could not put Humpty Dumpty back together again.

The Stock Market has had a great fall and all the brokers, CEOs, analysts and politicians have not been able to get it back up again.

Oh, it will go up again, but if history has a way of repeating it will be a long time before we see it at "even". From 1920 to the present there have been 3 major bull markets lasting close to 16 years. Unfortunately, each has been followed by a bear market of about the same length of time. So far we are ending the 3rd year of the projected down cycle with only 13 more years to get to the bottom. It is a long way off.

At a recent investment seminar one of the speakers asked his large audience if they believed the stock market would be higher 5 years from now. Every one except one thought it would be. The current mindset of most investors believes this also. For the period from 1982 to 2000 (18 years, close enough) there has been a bull market. Every investor has considered himself to be a financial genius during that time. There is an old saying, "The market makes fools of us all ? sooner or later".

Unless you learn to listen to what the market is saying and not your broker, you will be able to recoup some of your losses, but probably not all. During this long-term bear called a secular bear market, your main effort will not be to make money but to keep from losing more. During a bear market the one who loses the least is a winner. You may not like what I say, but history has that strange way of doing it over and over.

Maybe I am wrong about it because "this time it is different". I hope so, but you can protect your money in your 401K or elsewhere with a simple loss limit order. Call your broker and have him place a 10% (or whatever number your prefer) stop-loss order on all your positions. That way you don't guess about where to sell; you let the market tell you when it has turned weak.

Brokers and brokerage companies hate stop-loss orders and will try to talk you out of it. Ask him if he will guarantee your portfolio. You can bet he isn't that dumb. It is your money. Once it is gone you will have very little chance of getting it back. Protect what you have left.

Don't be a Humpty Dumpty!

Al Thomas

Author of "If It Doesn't Go Up, Don't Buy It!"

Never lose money in the stock market again.

http://www.mutualfundmagic.com

---

Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading?

Ever notice how behavior in one area of life can... Read More

No Load Mutual Funds: Boost Your Portfolios Returns

Investors who exclusively use broadly diversified, no load mutual funds... Read More

The Three Little Pigs Went to the Stock Market

Three little pigs went to the market to stock up... Read More

Invest, Be Wrong, and Make Money in the Stock Market

I have been trading for several decades and was an... Read More

Momentum

One of the basic laws of physics states that a... Read More

Trading For A Living

How many times have you said to yourself, "I'd like... Read More

Stocks: Understand What You Buy!

"There is nothing more frightful than ignorance in action!" Johann... Read More

Dont Buy Stocks based on P/E Ratio alone

I use the P/E ratio as a secondary indicator for... Read More

The Golden Goose is Sick

It is finally catching up with them. The brokerage companies... Read More

DIY Portfolio Management

Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More

Selling Strategies - Setting a Stop Loss

Sometimes the best way of lowering exposure to risk is... Read More

Prospering with Mutual Funds: How Anyone can ?Afford? an Investment Advisor

Recently I was invited to appear on a live CNNfn... Read More

Starbucks Stock is Up

Starbucks earnings are up again and so is their stock... Read More

Managing Investing and Stock Market Risks

Reduce your investing and stock market risks by:Setting your sights... Read More

The Holy Grail (of Investment)

Every year I go to the Money Show in Orlando,... Read More

VIX

No, this is not a symbol for some Latin number.... Read More

Its Better

Question: How does it get better when it gets worse?Last... Read More

Mr. Market

I constantly hear the talking heads on CNBC-TV, the radio... Read More

Investing in Stocks and The Game of Monopoly

To begin, you might look at playing the stock market... Read More

How Much Money Can I Make With Trading? What Account Size Do I Need To Start?

What account size do I need?How much money can I... Read More

The Inside Scoop on Mutual Fund Rip Offs

The bear market that showed up at the end of... Read More

Investment Attorneys and Garbage Stocks

How is it possible that trash Companies are posting less... Read More

The Elephant

Four blind men were asked to give a description of... Read More

Trading Systems

To become a successful trader you must have some kind... Read More

The Stock Trading Plan - Why You Must Have One To Trade Successfully

This is the continuing story of our two imaginary traders,... Read More

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend... Read More

How Eating Bitumen Made Me a Better Trader

Trading is a fascinating activity.There are so many layers to... Read More

Stock Market Investing Odds

The greatest stock market myth is the idea that investing... Read More

Option Trading Basics

Options trading can increase the profits you make when trading... Read More

Buying New Issues

Has your broker been calling you recently with the "great... Read More

Smart Day Trading Strategies to Help You Make Money in the Stock Market

Stock trading can be a very profitable activity. You can... Read More

Is Active Trading The Answer?

One of the main reasons many of us get into... Read More

Basics of Stock Market

Financial markets provide their participants with the most favorable conditions... Read More