If you have talked to a stock broker or financial planner in the last few days I will bet they all agree that there are some great bargains out there and now is the time to start buying in anticipation that the market will go back up. You will also find agreement from the talking heads on CNBC and those talk radio station stock mavens. No one says sell. It looks like bottom pickers heaven.

A year ago when the Nasdaq was 2000 points higher they were telling you the same thing. Buy. Buy. Buy. If they are so smart to get you to buy now then why weren\’t they smart enough to tell you to sell when it was way up there? There are two basic rules for professional traders: never let a profitable trade go to a loss and never take a large loss. The talking heads are either not professionals or don\’t understand their business.

Since the beginning of the year the tech stocks have lost 34% and from last year they are down from the highs 65% and it looks like they are going lower. Isn\’t it time to end the bloodletting and sell? The problem with the small investor is he doesn\’t believe he has a loss until he sells. Wall Street has taught him that the market \’always comes back\’. Folks, not this time.

All classes of mutual funds have posted losses in the first quarter of 2001 for the first time since 1980.

Has your broker or financial planner called you to sell out to go to the safe haven of a money market fund? I will bet he hasn\’t. Unfortunately these \”experts\” are not taught to protect your capital. They will watch their customers\’ account dwindle away 30%, 40% 50% and more and never do anything about it. It isn\’t their money. It is yours. You have to take the responsibility to guard it. The average broker has 300 clients. Unless you are a 7-figure account you will not receive any attention. Of the 77,000,000 mutual fund owners in the U.S. 80% of those accounts have less than $50,000. Their advice is either none or bad.

We know the economy is slowing down and has been since early last fall. The market was continuing to go up in anticipation and was ignoring underlying facts. The emotional enthusiasm was carrying it to new highs almost every day. Of course, Mr. Greenspan didn\’t help anything by raising interest rates when he should have known better. It is the brokers\’ job to sell stock and make commission, but it should also be his job to advise the neophyte investor to protect his capital.

The trend is your friend. The trend is down. It is still not too late to sell and put what\’s left of your cash in a money market account. Forget about your losses. That money is gone. You must protect what you have left. Never try to pick the bottom. There are no \”bargains\” at this level. Cash is the best position right now.

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.

Copyright 2005

Writen By : Al Thomas

Tags: Brokers, funds, investments, mutual funds, retirem, stock market, stock portfolio, stocks, traders

Being wrong is OK, but let\’s not carry it to extremes. That applies to everything, but let\’s limit our discussion here to the stock market.

I have been trading for several decades and was an exchange memebr and floor trader for 17 years. You learn fast there or you go broke in a hurry. As you can see I managed to hold my own for a few years until I found the secret and started to become a successful trader. Every professional trader I know knows the one great secret and that is to keep your losses small.

We all learned that when we took a position – either long or short – that we better be able to jump out if the trade was not going our way. Many of my friends were scalpers. That means they were trading for just a few ticks and every night went home flat. Flat is no positions at all.

Others, myself included, took a longer look and planned to hold a position for a period of time. That could be several days or weeks. If you were right the longer you held on the more money you would make.

The general public seems think that exchange members know everything and always made money. Tain\’t so. Many traders were wrong more than 50% of the time. Huh? Yes, fifty percent. My account had losses 40% of the time and 20% were scratch trades (neither winners nor losers).

You ask, \”If you are out of the money 60% of your trades how can you make money?\” This is what every professional knows: Keep your losses small and let your profits run. How many times have you heard that one? BUT how many times have you ignored that rule?

At the end of the year when you analyze your trades you find that you made $3.00 for each $1.00 you lost you will show a nice big profit.

I don\’t care what business you are in you don\’t put your whole wad on a single outcome and stick with it until it either works or go broke. That is what brokers and mutual fund managers want you to do. They want you to buy, but never sell.

It is a tragedy for the small investor today that mutual fund families are putting in selling restrictions to discourage investors from dumping funds that are headed down. Many require long holding periods and if you sell prior to that time they charge an extra fee of 2%. They give lame excuses that I know are not true for doing this. Never buy any fund or trade with any brokerage company that has that kind of rule.

It is cheaper to pay the 2% or whatever fee there is and get out than hang around and lose 20% to 40% of your equity. Look back at 2000 to 2003. This can happen again despite what your broker tells you.

Be wrong and run home with most of your money. You still have enough to invest in a better opportunity. If you are disciplined to get out of any bad situation early you will end up a rich person.

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.

Copyright 2005

Writen By : Al Thomas

Tags: Brokers, funds, investments, mutual funds, retirem, stock market, stock portfolio, stocks, traders

On Friday or Saturday evening my wife gets a movie from Block Buster and after dinner we sit, hold hands and watch. This week she brought back one that I think every investor or anyone contemplating investing in the market should see. It is called \”Boiler Room\”.

How many times have you been called out of the blue by some no-name broker who wants to make you rich provided you buy shares in this great new issue or some stock that is just about to \”take off\”.

Usually they start off with do I remember he called me 6 months ago and recommended so-and-so issue that is currently in the news because it has gone up 100 or 200%. He did not make that call and if he had I am sure I would not remember it. Also the name of his firm is one I never heard of, but it sounds very legitimate and he might even say they are affiliated with Chase Manhattan Bank or some other big bank. They might have their checking account with that institution, but otherwise they have no connection with them. Now he has another recommendation that is going to do even better that that one. Yes, and pigs can fly!

If you haven\’t done so yet don\’t let him go any further. Hang up. Oh, I know you can\’t because your mother taught you it is rude to hang up on people. Please, this time DON\’T listen to your mother. He will try to get you into a conversation by asking simple questions that must be answered with a \”Yes\”. Stop listening. If you can\’t bring yourself to hang up then put the phone down and walk away. In 10 minutes he will be gone to call another sucker.

There really are boiler rooms out there selling worthless securities and everything they do is 100% within the law and 100% immoral. How do I know this? I used to own a brokerage firm and I received monthly reports from the regulatory agencies outlining charges against these shady dealers. Fortunately, I did not have those problems as I would not allow hype to open accounts.

The things being told on the phone are usually too good to be true and that is a fact. Do yourself a favor and rent that movie. Not all brokerage firms are like this, but remember my basic rule.

NEVER SEND MONEY TO A VOICE ON THE PHONE.

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.

Copyright 2005

Writen By : Al Thomas

Tags: Brokers, funds, investments, mutual funds, retirem, stock market, stock portfolio, stocks, traders

The broker told me not to sell because the mutual fund I owned had a 2% redemption fee and they would penalize me if I did.

I got to thinking about it and did some simple math to see what that would cost me if I sold. Several months ago I bought $5,000 of the fund. Fortunately, it was a no-load so I was not charged any commission. It seems that the brokerage house has instituted this fee for the sole purpose of dissuading me from ever selling it.

Now I could sell it for $5,500 and make a nice $500 profit in the last 3 months. Their charge of 2% would be $110. In other words they were charging me 22% of my profit which you can easily figure as $110/$500. That\’s a long way from 2%. What a rip. My net was now $390.

More and more brokerage companies and mutual funds are adding redemption fees. No-load mutual funds are adding the fees even when you have an account with the fund family. Why? The fund managers are paid their 6-figure salaries not on how much profit they make for you but on the amount of money they have under management. He can generate big money for himself while you lose.

The whole idea of the mutual fund was to have a professional manager make money for you yet last year more than 95% of stock mutual funds lost money. It is pretty obvious you don\’t need this guy to mangle your cash.

In the future before you purchase any fund ask the broker of there is any kind of redemption fee. If there is then find another fund and/or another broker. Discount brokers are the best because their brokers are not allowed to give you advice. You will find that advice from a broker is a eulogy for your money.

Redemption fees are like a ball and chain on your ability to make money. Any professional trader (and I was a floor trader for 17 years) will tell you that a small loss is OK, but never allow yourself to have a large loss. Excess fees are put on by brokerage companies and funds to keep you from selling out of a losing position. The broker does not make any money if your cash sits in a money market account so he will do everything legally possible to keep you from selling.

Buy and Hold might be OK for long-term bull markets, but during the current long-term bear market you should be able to sell without adding injury to insult. Redemption fees are a method to intimidate the investor from selling out a losing position. Don\’t buy anything that comes with a ball and chain.

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.

Copyright 2005

Writen By : Al Thomas

Tags: Brokers, funds, investments, mutual funds, retirem, stock market, stock portfolio, stocks, traders

Have you been listening to the talking heads on CNBC-TV? Or those talk radio stock experts? Getting all those good recommendations on what to buy now. Now?

Those guys keep telling me the market is oversold. It can\’t go any lower. (But it does.) I bet your broker has some hot tips for you too. Advice from a broker is a eulogy for your money. I don\’t think he has told you about the one position you should have in your account right now. It\’s a nasty four letter word to him – CASH. In a money market fund it will make you about 5%, maybe 6% and that is better than the bloodletting going on in the market.

There is an old saying – \”When in doubt, get out\”. And right now everything is in doubt. The \”experts\” are confused as one says \’recession\’, another says \’hard landing\’, another \’soft landing\’, \’buy\’, and no one says \’sell\’. That last word is a \’no-no\’ on Wall Street. Less than 3% of all brokerage recommendations are sells. They are afraid they will offend the company and won\’t be able to talk to the CEO any more. Hey, what about us customers out here? We are the ones who are paying the bills.

Garrett van Wagoner of the Van Wagoner family of funds said he follows 5,200 Nasdaq stocks and that more than 1,000 of them have lost 90% of their value and 200 have dropped over 99% in value. Yes, he says there are some great values out there, but he doesn\’t say which ones or when to buy. I\’d like to ask him if he was smart enough to sell some of those puppies before they hit bottom.

The stock market mavens think they are market makers, but they are more like weather meteorologists who predict but cannot manipulate the weather. When the weatherman is wrong you get wet. When the stock experts are wrong you get soaked.

As I have said in past columns there is no hope that Nasdaq will go back to the 5000 level for many, many years. Ten years would be my closest guess. There are too many stocks being held by investors who are waiting for a rally up so they can get out \”even\”. This kind of thinking keeps you poor. Your money is tied up in a stock that will never perform when it could be some place else making you a profit. There is always some dummy out there who will buy your garbage.

We are having a bargain basement sale now in the stock market. Most of it is something no one wants. Ever been to a garage sale? Can their junk be your treasure? There will be plenty of time to buy, but now is not the time to go shopping.

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.

Copyright 2005

Writen By : Al Thomas

Tags: Brokers, funds, investments, mutual funds, retirem, stock market, stock portfolio, stocks, traders

Every day I hear someone on CNBC proclaim that \”this is the bottom\” and you should get in there and buy all those \”bargains\”. \”The valuations of the DOW stocks are a steal.\”

The low of DOW 8,000 immediately after September 11 was \”the low\” and the market did rally to about 10,700. That\’s 2,700 points. A smart trader could have made a fortune in six months. Oops! Then there was a Brody to DOW 7500. That\’s more than 3,000 points. That, for sure, is \”the bottom\”. I heard them say so on TV and radio. It can\’t go any lower. Can it?

There has been a 1,500 point rally, but there now seems to be another one of those \’Oops\’ taking place. What is going on anyway?

The great majority of the media are too young to remember the last bear market of 1973-74 when the S

Tags: Brokers, funds, investments, mutual funds, retirem, stock market, stock portfolio, stocks, traders