What To Buy Now

I am sure that if you have a brokerage account with a "full service" broker you have been getting calls about what to buy and sell. If you have big losses in certain stocks you might be hit with that great Wall Street lie to buy more so you can 'Dollar Cost Average'. It doesn't work.

In a recent study going back for 5 years a dollar cost averaging program was set up buying the S&P500 Index mutual fund. At the end of 62 months the investor had put in $31,000 and it was now worth $31,162. You would have done better in a savings account at your bank. And that assumes there was no commission or fees of any kind.

Let's say you owned a stock such as Cisco. This one is held by hundreds of thousands of investors and almost every one of them has a loss. It traded as high as $82 and for more than a year was in a range over $50/share. It was the darling of very broker from here to Timbuktu and when it started down they kept yelling buy more, buy more. Another one in this same category is Lucent going from about $80 to $5. Yuk!

Now Wall Street is trying to get you to buy more of these losers so you can "get out even" when it goes back up. And pigs can fly. Think about this. The person that currently owns these stocks or any similar ones with big losses is now waiting for them to go back up so they can "get out even". Ho boy. It should be extremely obvious that every time one of the monsters sticks its head up it is going to be hit with tremendous selling. There isn't a chance that any of them will ever get back to their old high prices ? or even close.

What does an investor do? Clean out your garage and have a yard sale. Get rid of this junk and put your money to work where there is a chance to make a profit. And don't buy any stock that has lost 50% to 80% during the bear market of the last 2 years. Brokers will tell you these are now "cheap" and are a good buy. Not a chance. There are too many people waiting to sell.

Now is the time to try to find a completely different equity that did not get hammered last year. Look for one that has a nice smooth upward pattern. Buy it and this time know how much loss you will be willing take if it goes down. How do you do that? Very simple. Use a trailing loss limit order called an open stop-loss order about 10% under the lowest price of the previous month - and keep moving it up as the price advances. That way you will not give back profits.

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

Lights of the Stock Market

There are red lights, green lights, blue lights and spot lights. There are orange lights,... Read More


What does it take to be a stock trader? It takes a total mental commitment... Read More

Oil Stocks CHK WLL - What Is Their Worth?

(1) CHK stock price $16.74, NAV $32.5CHK is my favorite oil or natural gas stock.... Read More

Value Investing: Selecting From The Bargain Bin

Picking a beaten-down stock requires a different kind of selection process. Normally, most companies beaten... Read More

Is Your Garage Full Of Junk?

I have a 2-car garage. There are nice shelves on one side and a good... Read More

Is Active Trading The Answer?

One of the main reasons many of us get into investing is to become financially... Read More

Pension Plans

If you have a pension plan at work you will want to read this and... Read More

Emotional Involvement

I'll bet with almost anyone that has stocks or mutual funds in his portfolio that... Read More


During our travel down life's path we come to many places where the trail divides... Read More

Hill of Hope

Just about now everyone is confused as to which way the stock market is going... Read More

Understanding the Bulls and the Bears

If you've ever flipped on the television to CNN Financial or paged through the finance... Read More

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds are an appropriate investment for... Read More

Never Fall In Love!

Recently I watched my favorite football team lose a vital game.I... Read More

Mutual Fund Ball and Chain

The broker told me not to sell because the mutual fund I owned had a... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor. This is especially important, since... Read More

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

I have been trading for several decades and was an exchange member and floor trader... Read More

Duct Tape

Did you run out to buy that duct tape yet? Don't forget the plastic sheeting,... Read More

Understanding Stock Market Indexes

A stock market index is a statistical measure of changes in the securities markets. An... Read More

Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market

In a previously written article, we expanded the use of the term "Trading Baskets" to... Read More

Paddle Your Canoe

At some time in your life you have been on a river in a canoe... Read More

Acapulco - The Stock Market Dives

There is a famous cliff on the ocean in Acapulco where experienced divers jump into... Read More

Psychology ? How to Reduce Negative Thoughts Relating to Trading?

The thinking process of the brain relating to the psychology of trading involves:-- Beliefs... Read More

Cash Is A Position

I go to the Money Show every year to visit with friends who have booths... Read More

No Load Mutual Funds or Exchange Traded Funds (ETFs)?

If you are fed up with early redemption charges and ever increasing mutual fund management... Read More

Advisory News Letters

Several times each month I am solicited by various market touts who have a newsletter... Read More

The Seven Mistakes All Novice Traders Make and How to Correct Them

We learnt the following the hard way! If any of these things applies to you,... Read More

Mutual Fund Honor Roll ? Buy High, Sell Low by Chasing Performance

Buy high and sell low -- It's not a typo.Millions of investors guarantee their failure... Read More

Wal-Mart: Discount Store, Discounted Stock?

As GuruFocus updates the stock buys and sells of gurus, Wal-Mart (WMT), the discount retail... Read More

Nest Eggs and Omelets

Do you have a nest egg? You know, a place you are stashing away money... Read More

Is The Bear In The Cage?

For the last few weeks we have seen the stock market averages going higher and... Read More

Top 25 Growth Funds

On Monday, November 25, 2000 Investor's Business Daily listed on page B1 the Top 25... Read More

The Skinny on Mutual Fund Investing

Mutual fund investing is a lot like Thai cooking. Everyone has heard of it, most... Read More

Hold Em and Fold Em

When most analysts, financial planners, fund specialists and investors try to decide whether to buy... Read More

Which Way The Market

I am hearing predictions by brokers, financial planners, talk show hosts and the talking heads... Read More

Dividend Paying Stocks

I would like to share with the reader an article printed in the financial section... Read More

Fake Money

Reach in your pocket and take out that big roll of bills. Depending on how... Read More

How Much Information Do You Need?

You have decided to buy some stock or mutual funds, but wonder which one to... Read More

Inverted Interest Rates

Inverted interest rates? What's that? Who cares? Even if you don't understand what Mr. Greenspan... Read More

How Eating Bitumen Made Me a Better Trader

Trading is a fascinating activity.There are so many layers to it. And so many paths... Read More

More Window Dressing

Two weeks ago I wrote about what the Securities and Exchange Commission was doing to... Read More

You Don?t HAVE To Be Trading

As a novice trader, you'll often feel the need to trade.You may be bored or... Read More


The spring-loaded rat catcher is the ultimate low-tech device invented more than 100 years ago... Read More

Stock Valuation using the SMP Model

Disclaimer: Please note that I do not necessarily purchase, own, or partake of any of... 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 hot stocks every day. Many... Read More

Overvalued & Underbought

With all the bad news that has been dumped upon the economy for some reason... Read More

Living Trust Investing: Income Considerations when the Grantor Dies

A common problem I often see when working with living trust beneficiaries and trustees is... Read More

The 401(K): How The Insider Has Stolen Your Retirement!

Mutual funds were moderately successful in creating a presence in the stock market until the... Read More

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 make with trading?First of all,... Read More

War Market

There is no question that the stock market is being affected by war jitters. When... Read More

True Investment Road Maps

If you don't know where you are going any road will get there. After you... Read More