Frog In The Pot
Currently the long term market trend is up so complacency reigns supreme. It is doing exactlythe same as in 2000. When 2002 ended we had asurplus of boiled frogs. A smart frog will notbe lulled to sleep and will have a plan to jumpout of the pot. A frog without a plan plans tobe frog soup.
There are many ways for the frog to escape and there are many ways for investors to retaintheir profits or at least not lose their moneythe next time the market heads down. It will ifpast performance is any guide to futuresresults. Any plan to jump out is better than noplan at all.
Whether you own stocks, mutual funds or ETFs (Exchange Traded Funds) you can set a limit asto how much you are willing to lose from thispoint (that's now, today). Any fool (frog) canbuy, but it is the wise man (frog) who knows howto sell (escape the pot).
If you want to have money for retirement youmust protect your capital from loss with a riskmanagement strategy. First protect yourprinciple and then protect the profits you havemade on the recent stock market advance. It isnot difficult to do.
With stocks and ETFs you can place an Open Stop Loss Order with your broker or financialplanner. He won't like this, but it is yourmoney not his. Don't let him talk you out of it. For regular mutual funds you must have a mentalstop and when that price is hit you call yourbroker (he won't call you) or the fund directlyto tell them to transfer your funds to a MoneyMarket account. Cash is a position.
If you are not familiar with stop loss ordersyou can find books in your library and there arehundreds of articles on the Internet. See someof my previous articles on my web site.
The water is heating up. Don't fall asleep and become a poor frog.