No, not the money you have in your brokerage account, but mutual funds. This year so far more than 600 mutual funds have vanished. Where did they go and what happened to the money in those funds that belongs to the investors? The mutual funds were either liquidated or merged out of existence.

Not to worry. Investors did not lose any money, but there could be tax consequences. If the mutual fund is in a tax-sheltered plan of some kind it won\’t make any difference as far as taxes go; however, if the investor is not in a tax shelter he will be responsible for the capital gains taxes, if any. When a fund manager liquidates a stock for a profit within the portfolio the profit must be declared and a capital gain distribution sent to all investors in the fund.

The situation is different if there is a merger. The stocks within the fund are absorbed into the surviving fund and may or may not be sold depending on the investment philosophy of the fund manager. For the investor who wants to be invested in a particular type of fund this may deviate from his personal goals.

The big and famous funds don\’t merge or liquidate, but in fund families such as Fidelity, Liberty, Janus, etc. they have been known to merge their weak funds into stronger ones. The prime reason being that the fund is not making any money and is unable to attract new investors. Usually the fund is taken into one that has a similar portfolio and this helps a fund family as it buries the losers and shores up their overall track record. It does reduce overall expenses and works to the advantage of the investor. You must be aware that sometimes money is moved from one non-performing fund to another. You have to find this out for yourself.

One good thing about the liquidation of a poor performer is that it forces the investor to move his money from a bad situation to (hopefully) a better one.

This year is not going to be a banner year for the majority of mutual funds. It should force many investors to take a closer look at what these fund managers have done with their money. At this time it might be a good idea to evaluate what your funds have done for you lately. If over the past few years they have not outperformed the S

Tags: bank, bonds, invest, investments, markets, money, risk, stock broker, stock stops, stocks, strategies

Think about this one. Has your broker EVER recommended that you place a stop-loss order on a stock after you have bought it? Ninety-nine percent of the brokers never think about helping you protect your capital. In fact these brokers are not taught this very important technique. The brokerage companies don\’t realize that by helping you get out of a poor position it gives them more of your money to trade again to make them even more commissions which is all they really care about.

You see, they don\’t want to recommend stops because if you sell out you might take your money out and that\’s a no-no. Or worse yet, you might blame the broker because the stock went up after you were out and now you are mad. Let me draw on my 30 years of experience as a trader and let you in on a little secret. Three weeks to 6 weeks after you have been stopped out of any position that individual issue is going to be lower than where you sold it in about 75 to 80% of the time. When you are at the gaming table you must go with the odds.

I hear your protests. \”But I\’m not a gambler, I\’m a long term investor\” No, you\’re not. You are just as much of a speculator as the day trader; the only difference of the time frame. To make a substantial return on your investment you must keep you funds working with profitable stocks or mutual funds all the time. You cannot afford to buy something and have it drop in price and then wait months or years for it to come back \”even\”. It is not \”even\” because you have lost the investment power of your cash by not being in some other stock that is going up NOW not some nebulous time in the future.

Stops are easy to figure. Don\’t ask your broker; he probably doesn\’t know. Very simply you might place a 10% stop below the low of the previous 2 weeks and keep moving it up every Monday morning. Let\’s take a look at what might have happened in this recent crazy tech market. Microsoft went to $119 and as of this Friday, May 26 was $61; WorldCom went to $64, now $37; Palm $165, now $21; E-trade $72, now $15; Ask Jeeves $190, now $20; Red Hat $151, now $17 and there are plenty more like this. Many are 80% lower and it is doubtful we will see new highs in our lifetime. If you owned any of these last year and did not have a stop sell you are hurting today.

And if you did get stopped out and it went to a new high you could buy it back again placing the same kind of stop. Using this method to sell is letting the market tell you when to get out and not guessing that this is the high. You don\’t know. Neither do I. Let the price action tell you. This is what the professionals do.

You must learn how to use stops or you will never make real money in the market.

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: bank, bonds, invest, investments, markets, money, risk, stock broker, stock stops, stocks, strategies

Because almost everyone has been baffled by Wall Street baloney they have accepted the conventional wisdom that every investor needs a stock broker or financial planner if they are going to invest in the stock market.

That would be true if brokers and planners were trained to not only pick stocks, but also protect the investors? money. Neither is true. That seems like a pretty horrific statement. I know because I used to own a brokerage firm and have hired 300 brokers. Only 1% or 2% of them knew what they were doing and consequently lost money for their clients. That probably applies to so-called financial planners because they all went to the same non-school.

Yes, I said they received no training which is true in almost 99% of the individuals. What little ?advice? they received was based on false and untrue premises. The Buy and Hold philosophy is the biggest lie of Wall Street. No broker is taught an exit strategy ? how and when to sell. Protection of customers? money should be number one on their list; however, brokerage companies do not want you to sell . They would rather have you go broke. (Of course, they don?t say that.) The investor is quoted the Ibbotson study. Unfortunately, the quote only shares one half of the study and the part about why Buy and Hold does not work is never given.

Wall Street has told you that you are too dumb to pick your own investments and that you need a broker to help you decipher the intricate maze that leads to financial freedom. Too bad most brokers haven?t learned or the 7 trillion dollars in losses that occurred from 2000 would not have happened.

Not only have liars and thieves been uncovered in Enron and World Com, but now we find that the fund managers of great bastions of ?safe? investing in mutual funds have also been stealing from their shareholders. Yes, late trading is theft and has been misnamed market timing. This also leads me to realize that the SEC has not been doing their job of protecting the small investor.

With all this corruption you, the investors, are more confused than ever. What do I do now? Where should I put my money? You need ?expert? advice and I must say to you that you will not get it from a broker. Advice from a broker is a eulogy for your money. No, now is the time for you to take charge of your own investment portfolio. Could you have done any worse in the past 3 years than letting a ?professional? handle your money?

There are many places you can seek advice, but none of them are on Wall Street. The library and the Internet are both great sources of information. Find someone who does not fit the Wall Street pattern. Several someones. And start your financial education.

Go look in the mirror and say, ?Tell me what to do?.

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: bank, bonds, invest, investments, markets, money, risk, stock broker, stock stops, stocks, strategies