| Now where have I heard that before? I know. | | | | you to buy then why weren't they able to tell |
| It was my broker. | | | | you to sell? |
| | | | |
| So I took his advice and bought some of the | | | | I'll tell you why. Brokerage companies never |
| stocks he recommended. I am still waiting for | | | | give sell signals because they don't want to |
| the 'sell high' part of the equation. | | | | offend a company that might come out with a |
| Everything he touted went up for a while and | | | | public offering on which they will make a |
| now it is lower than when I bought it. It is | | | | killing. It is better to kill a few customers |
| so low I can't bring myself to sell it. My | | | | than miss out on several million dollars. |
| capital has shrunk about 60% from where I | | | | You pay commission and ask for honest advice, |
| started. That's a lot of money to me because | | | | but you are being fed disinformation. |
| it took a long time to save it. What | | | | |
| happened? | | | | Is there any way you can protect yourself |
| | | | from this nonsense? Yes! It is called a |
| The brokerage company that your broker works | | | | stop-loss order. Brokers don't like them |
| for puts out recommendations almost very week | | | | because then they have to watch your account. |
| for various companies listed on the major | | | | He will tell you you don't need it as he will |
| stock exchanges. They have simple things like | | | | watch your account. And pigs can fly. The |
| Buy or Strong Buy. Then they have a complex | | | | average broker has 300 accounts and unless |
| group of words used when they downgrade a | | | | you have a large 6-figure account you will be |
| stock. It never goes from Buy to Sell. No, it | | | | on the bottom of the pile. |
| becomes Accumulate, Underperform, Attractive, | | | | |
| Market Perform, Neutral or some other | | | | Anyone can place a protective open stop-loss |
| meaningless term. If any stock is ever | | | | order for stocks. Most are about 8% to 15% |
| downgraded even one notch sell it | | | | below the highest closing price. I recommend |
| immediately. Finally after a stock has lost | | | | that each Saturday morning you look in the |
| 50% or more of its value it becomes a 'Hold". | | | | paper for the Friday closing price of your |
| And you know where you are holding it. | | | | stock and place your open stop each Monday |
| | | | morning with the broker. As your stock moves |
| Last year the brokerage companies gave over | | | | up keep raising the stop and you will sell |
| 33,000 stock recommendations to their | | | | near the high. Never lower it. This will lock |
| customers. Of those only 125 were Sell. On | | | | in your profit or take you out of a losing |
| the NASDAQ exchange alone there were over | | | | position. I can assure you your broker will |
| 1,000 stocks that lost more than 90% of their | | | | never call you to sell. Brokers are not |
| value. The "experts", known as analysts, were | | | | taught to protect your capital. |
| all telling you to buy. Your kid could have | | | | |
| thrown a dart at the Wall Street Journal in | | | | This is the only way to buy low, sell high, |
| 1999 and done as good a job as almost any | | | | protect your capital and lock in your |
| analyst. What I want to know (and I think you | | | | profits. |
| do too) is if they were smart enough to tell | | | | |