| The stock market has been going up for | | | | mixed suit 2, 5 and 10. The best thing |
| more than 7 months and many investors | | | | to do is fold. |
| who held on through the big crash of | | | | Over the last few months almost everyone |
| 2000 are seeing their portfolios get | | | | has seen his stock and funds go up and |
| back some of what had disappeared. Is | | | | he thinks he is a genius for hanging on. |
| now the time to sell those equities that | | | | Don't confuse genius with a bull market. |
| are 'even' with what you paid for them? | | | | So what do I mean let the market tell |
| No. | | | | you? It actually is very simple. You |
| The reason I say "no" is because that is | | | | place an Open Stop Loss Order with your |
| a guess and to be a successful investor | | | | broker on all your stocks. You determine |
| you don't want to be guessing. That is a | | | | the risk and place the loss limit at |
| sure way to go broke. Then what is a | | | | that point. Some people use 10% and |
| better way? When you talk with a broker | | | | others may limit their loss to 7% and |
| he never advises you to sell. In that | | | | yet others to 15%. That is your risk |
| case you could be sucked into another | | | | quotient. |
| huge downward move. There must be a way. | | | | You will find that if your stock or fund |
| Yes, there is. You let the market tell | | | | is sold as a result of the stop loss |
| you. No, you don't have to be | | | | that in 4 to 6 months that equity will |
| clairvoyant. When you buy any stock or | | | | be lower than where you got out even if |
| mutual fund the first question for your | | | | it went higher for a short period of |
| broker should be, "When do I sell?" If | | | | time. When a stop is executed don't look |
| he says you should hold on "for the long | | | | back. Find another equity or keep your |
| haul" I definitely recommend you fire | | | | money in cash in a money market account. |
| him and find someone who knows how to | | | | Cash is a position. Sometimes it will |
| protect your capital. If you buy a stock | | | | make you more money than owning any |
| or fund for $40 per share you must know | | | | stock especially when the market is |
| immediately how much you are willing to | | | | headed down. |
| risk (lose) if that equity starts down | | | | People become confused by Wall Street |
| instead of up. The same applies to | | | | into thinking that buying right is the |
| giving back any of the profits you have | | | | way to make money. Wrong! The secret of |
| earned. | | | | success in the market is a well |
| When you are playing poker you don't put | | | | disciplined exit strategy. Know when to |
| more money in the pot when you have a | | | | hold 'em and know when to fold 'em. |