Where Is The Rabbit?

We need a rabbit!

This was a pretty horrible week for the market with two 100-point days and Friday closing on the lows.

During these past few days Sir Alan told us things are looking up and the economy is basically strong. Mr. Market didn't hear him. It seems that jaw boning can't get people to buy. In fact there were more sellers than buyers.

If you go back in history it is a truism that has become conventional wisdom that the stock market goes up during an election year. The reasoning is obvious. The president - who ever he is - in office will pull out all the stops to create the illusion that the economy is in good shape and he is the one who takes credit for it. Both Mr. Bush and the Fed chairman better get their best top hat out and reach way down for that white rabbit.

It is going take some real magic to get folks in a buying mood. The lower it goes the less likely they are to buy. Of course, brokers are calling and telling investors, "This is the break to buy. Stocks are cheap. Better get on board now. You can't let this opportunity pass by. You can't afford to be out of the market." And on and on with the platitudes. Don't believe any of that hog wash.

What brokers should be telling investors is to protect their money by placing stop loss orders. You can be sure that won't happen. The big brokerage firms frown on stops and punish brokers who encourage customers to use them. Fortunately, when I was a broker I worked for company that did not penalize this concept and I refused to take a customer who would not place stops when they bought something. That is why I never lost customers and had them for years.

This year the major indexes (DOW, S&P, and NASDAQ) are down. Not a great deal, but definitely lower. This means for those who invest in index mutual funds that they are running a loss. Brokers always say, "You are in for the long haul" so not to worry about what is happening now. That's what they told you in 2000 and you still have not recovered your losses from then.

No brokerage firm tells the true story of the secular bull and bear markets. These have occurred with great regularity for the past 200 years and will, if history continues to repeat, follow the same course. The shortest secular bear has been 8 years and the longest 25 years. At a minimum we are not half way through this one. Prudent investors (and I hope that's you) will protect their portfolios with stop loss protection on every position. Every broker and financial planner will advise against it, but it your money not theirs.

The market is not magic. Hocus pocus and white rabbits will not make it go up for very long. Illusions are not where it's at. Forget the brokers' abracadabras and place your stop loss protection today.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

1-888-345-7870; al@mutualfundstrategy.com

In The News:


pen paper and inkwell


cat break through


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

Selection Vs Direction

As I have said many times before in this column... Read More

A Common Misconception about Stock Prices

I cringe every time I hear a novice investor tell... Read More

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

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

Fake Money

Reach in your pocket and take out that big roll... Read More

Using Sector Funds to Construct Diversified Mutual Fund Portfolios

'Sector funds are too risky.' 'I doubled my money with... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Market Timing?

The recent criminal fiasco in the mutual fund industry is... Read More

Robert Rodriguez Weathers the Stock Market

Robert Rodriguez likes to buy stocks at their lows. When... Read More

Emotional Involvement

I'll bet with almost anyone that has stocks or mutual... Read More

Stocks: Understand What You Buy!

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

The Stock Market - Part 1: Believe It Or Not, Its Always Been Your Best Friend And Always Will Be

Regardless of the fact that the world's stock markets have... Read More

Jack and Jill

Jack and Jill went up the hill to fetch a... Read More

How to Short Stocks? How to Make Money when Your Stocks Go Down by Shorting

The stock market can present you with a lot of... Read More

Your Trading Objective: Why is that so Important?

You've decided to try your luck at trading stocks or... Read More

Buying New Issues

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

How To Be A Winner

Everyone who invests in the stock market wants to be... Read More

Will the Stock Market be Lower in October?

The stock market often closes a week in the middle... Read More

Staying Sane While Wall Street Crashes

Everybody is riding the Wall Street Roller coaster. Even if... Read More

Investment Attorneys and Garbage Stocks

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

Inertia

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

Dont Buy Worldcom! A Guide to Wise Bottom Fishing

Over the past few months, several investment professionals have brought... Read More

Low Tide

When you stand on the ocean shore and watch the... Read More

Long-Term Investment In Todays Market?

The stock market is very unstable at this time going... Read More

Where Is The Rabbit?

We need a rabbit!This was a pretty horrible week for... Read More

Struggling Stocks, Booming Commodities

04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More

Learn to Calculate a Stock?s Pivot Point

Stocks breakout from properly formed bases everyday but many investors... Read More

Stock Market Volatility

In my opinion, due to the volatility of stock market... Read More

Understanding the Bulls and the Bears

If you've ever flipped on the television to CNN Financial... Read More

Why Stock Is More Risky Than Options!

You probably have been told that options are risky. Even... Read More

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

How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by... Read More

It Cant Be Done

Wouldn't it be nice if you were only in the... Read More