| Very few investors make money in the stock | | | | parts. Select 10 mutual funds and/or exchange traded |
| market. | | | | funds (ETFs) that have quit going down and are now |
| Wall Street will deny this, of course, but look at | | | | going up and buy these. This doesn't have to be |
| where your account is today compared with what | | | | done all in one day. Spread it out over the next 2 or |
| you had at the beginning of 2000. Don't count what | | | | 3 months as good equities present themselves. |
| you have added during that time or interest income. | | | | Here is the key. Don't lose money. Ha, ha, you say. |
| Most folks are still running a loss. | | | | Place a 10% stop loss order on each fund that was |
| Your broker, if you are unlucky enough to have one, | | | | purchased and as each fund advances raise the stop |
| will assure you that the market always comes back | | | | every month. The investor has 10 separate positions |
| and you are in for the long haul. So don't worry, be | | | | with a 10% risk on each one. If the selection of the |
| happy. Is your name Alfred E Newman? | | | | fund was poor and it goes down instead of up the |
| If you were one of the few (about 1%) who had a | | | | loss is one percent (1%) of the total portfolio. |
| broker or financial planner that actually knew how to | | | | The investor has been smart enough to diversify into |
| protect your money you would not have lost a huge | | | | several sectors so the chance of losing in all 10 |
| portion of your portfolio from 2000 to 2003. The | | | | positions is very small. Do not buy individual stocks. |
| Wall Street mavens do not teach their brokers the | | | | Few investors are capable of choosing company |
| simplest technique for account protection. And they | | | | stocks. Let the mutual fund manager do that. Buying |
| never will. | | | | no load mutual funds there is no commission and |
| So, you have to learn to protect yourself! It is a lot | | | | even smaller fees in exchange traded funds. As stops |
| easier than you think and most brokers are not even | | | | are hit find other good equities that are going up. |
| aware of it. Even if they were their company would | | | | When the market turns down you will be in cash as |
| not allow them to implement it. | | | | you will have been stopped out of all positions with |
| Let's suppose you have been reading my column for | | | | nice profits. |
| the past few years and I showed how to know | | | | Brokers don't know any more that you do (and I'm |
| when the stock market was a buy. The buy signal | | | | not kidding) so you pick the no load funds and ETFs |
| was April 2003 and you are still long today. About | | | | you like. |
| 80% of 401K portfolios have less than $50,000 so | | | | This simple strategy will spread risk, prevent large |
| here is how to set up this money management | | | | initial losses and prevent giving back profits as they |
| technique. | | | | are made. |
| It was time to buy. Divide the portfolio into 10 equal | | | | |