I Love To Lose Money

Well, not really. What I mean is I don't mind losing a small amount when I have to sell a stock or mutual fund that is going down or taking away the profit I have made. During this past 3 years I have made money each year because I was not afraid to sell. The great secret that Wall Street does not want investors to know is all about selling, not buying.

The recent headlines scream"10 Stocks To Buy Now", "100 Best Mutual Funds For 2003", "Make 25% With These Safe Stocks" and "Now Is The Time To Buy". All are either stupidity or wishful thinking. Brokers and financial planners don't want you to find out that they don't know either so they come up with great stories about the equities they recommend. Unfortunately, when the stock or fund heads down it becomes one of those buy and hold situations and they tell you that you are "in for the long haul" and "the market always comes back". I hope that by now you have learned this is not true.

When there is a secular bear market, as I believe we are in now, it could be many years before we get back to "even". Last year 96% of all stock equity mutual funds lost money and the average fund lost 21%. These are times when the only safe place for money is in cash ? a money market account. For the previous 3 years money in your mattress outperformed the stock market by 40% and for lots of folks much more. Here is one your broker will not tell you ? Cash Is A Position.

The first thing you must learn about investing is how to protect yourself from losses. I mean big losses. When I was a floor trader on the exchange I lost on about 40% of my trades, but I never lost much. I came to love those little losses because I still had almost all my money available to find a better position. One that would make money.

Almost all of the magazine writers, talking heads and brokerage analysts are professional losers. It is easy to prove because they never tell you where to sell what they are telling you to buy. If you don't go in with a plan to protect your money it is like a general who goes into battle with no plan for retreat should he find he couldn't win the battle. One of the simplest money savers is the 10% stop. It you buy a stock or no-load mutual fund you should not take more than a 10% loss. This will leave you with 90% of your money that could find a real winner. The small losses will never break you. It is sitting with a loss that gets bigger and bigger and bigger is the one that will ruin you.

Learning to love the little losses will make you rich.

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

---

Successful Trading ? Establish Your Risk Level

Before you embark upon a journey of trading stocks or... Read More

Social Insecurity

Just about everything you have been told about Social Security... Read More

Trading For A Living

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

Cash Is A Position

I go to the Money Show every year to visit... Read More

?Fears Only Enemy Is Action?

What a great statement!I just heard someone use it in... Read More

Buying Stocks and the Importance of Correct Timing

An investor can find and research the best stock on... Read More

Outsourcing

It's about time someone spoke the truth concerning outsourcing. The... Read More

A Good Fund Manager

Every Wall Street analyst, financial planner and broker will tell... Read More

Pamplona, the Wild Investment Bulls

You remember (they show it on TV every year) the... Read More

So, What is This Stock Market Thing Anyway?

We've all heard of the stock market and probably have... Read More

Trade Stocks for Real

I read a comment by a forum member on another... Read More

Valuation

Every day I hear from the "experts" on CNBC-TV and... Read More

Stock Valuation using the SMP Model

Disclaimer: Please note that I do not necessarily purchase, own,... 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

Investment Attorneys and Garbage Stocks

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

Traders, Defend Against the Dreaded Death Spiral.

It has often been said that there is only two... Read More

Investing in Stocks and The Game of Monopoly

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

Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market

In a previously written article, we expanded the use of... Read More

Advantages and Disadvantages of Mutual Funds

Outlined below are some of the advantages and disadvantages of... Read More

What To Buy?

Now that you have some money burning a hole in... Read More

How Commodity Trading Differs from Stock Trading

There are major differences between trading stocks and trading futures.... Read More

How We Eluded The Bear Of 2000

The date October 13, 2000 will forever be embedded in... Read More

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Advisory News Letters

Several times each month I am solicited by various market... Read More

KISS Formula

There are formulas for just about everything, but it has... Read More

Roller Coaster

I love roller coasters. The steeper the better. High and... Read More

Hedge Funds

You read and hear a lot about hedge funds. Unfortunately,... Read More

Never Lose Money

Never lose money in the stock market again. Yeah, I... Read More

Historical Briefing: Stocks, Finance and Money

The World Bank claims that some two billion of the... Read More

Mr. Market

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

Municipal Bonds

Because there are so many stocks that are NOT paying... Read More

Buy and Hold Investment Philosophy

Wall Street has been preaching the doctrine of Buy and... Read More