THE ALCHEMIST                       by AL THOMAS
     THE GREAT STOCK MARKET SECRET
 When the stock market is going up and all
your stocks and mutual funds are making money you
feel like a genius. It is too bad that some folks
don’t remember what happened in 2000. Of course,
right now we are in one of those genius phases.
 Your broker and financial planner are
encouraging you to buy, buy, buy. And I can’t
fault that at this time. You remember back in
2000 how many times they told you to buy, buy, buy
while the market was going down, down, down. Are
we in another of those periods now that are
leading up to a humongous crash? Hey, I don’t
predict, but I do listen to the voice of the
market.
 The great Wall Street mantra is “buy a
good stock and put it away”. Did you keep WorldCom
and Global Crossing? Even if these were exceptions
because of fraud a smart investor would not have
lost any money. In fact he could have made a nice
profit.But Al, they went under! Yes, I know, but
the smart money still made out because they sold
near the top.
 As a former exchange member and floor
trader I was not right every time I bought
something and I especially did not like giving
back nice profits that had accumulated. You don’t
have to be psychic to know when to sell and don’t
think you are going to be able to pick the top. A
really smart trader waits for a stock or fund to
start up and then jumps on it with both feet. When
it starts down he jumps off looking for another
equity that is going up. The wise trader knows he
can’t buy the bottom and sell the top. What he
wants is a big bite out of the middle.
 When you make a sandwich most of the meat
is in the center and a professional trader does
the same with his trading. He wants to take a bite
out of the middle of the move. You can do this too
by looking for stocks, mutual funds or Exchange
Traded Funds that have a nice upward pattern. As I
said before buying is not the secret. Then what is?
 You must learn to sell - for two reasons.
First to protect your equity after your initial
purchase and second to keep from giving back
profits you have made as the equity advances. The
great Wall Street secret is an exit strategy:
knowing when to sell. Unless you learn to sell you
will not be successful in the market. Brokerage
companies do not want you to sell and rarely issue
sell signals. You must decide how much you are
willing to risk before you buy.
        The simplest way is with a percentage stop
loss order of 5%, 7%, 10%, 12%,  whatever you

can live with. Instruct your broker to place a
trialing stop or you can change it yourself every
week. Do not lower a stop.
 Selling is the great secret you will never
hear from your broker.

F*R*E*E investment letter

www.mutualfundmagic.com
Author of best seller "IF IT DOESN'T GO UP,
DON'T BUY IT!" Never lose money in the market.
Copyright 2004 Albert W. Thomas All rights
reserved.Former 17-year exchange member,

floor trader and brokerage company owner.