THE 10% SOLUTION

            Many of the pension and profit sharing plans forecast a 9% profit

for the long term. Very few have made it.

            Some trading methods advertised claim 20% and more. What is

more important is how much they allow the investor to lose before

pulling the plug on bad positions.

            When speaking with a broker or financial planner all they talk

about are their winning trades and how much they made last year or for

the past 3 to 5 years. Always ask to see their model portfolio for the

3 year period of 2000 – 2003. You MUST be able to VERIFY the trades.

Not that they would lie, but maybe the memory isn't so good.

            If they don't have a real time model get up and go as this is a

loser and they don't deserve any investor's money.

            Financial experts who want investors money will try to

mesmerize potential customers with Wall Street jargon. Forget it.

There is only one correct answer. How much profit was made during

each year for the past 10 years.

            If the investor is making his own financial decisions to buy

and sell individual stocks, exchange traded funds or mutual funds

there is one lesson that must be learned above all others. And that

is selling.

            The most important criteria of all is not to lose money. The

secret of Wall Street is not BUYING; it is SELLING. That is the 10%

solution to a successful portfolio.

            Do you own any of these equities?

            Google (GOOG) was 700+. Now 438. Off 37%

            Citigroup (C) was 52. Now 20. Off 61%

            Apple (AAPL) was 200. Now 143. Off 28%

            China Index (FXI) was 220. Now 137. Off 40%

            S&P500 Spyder (SPY) was 157. Now 131. Off 16%

And many stocks are down 50%.

            If an investor is foolish enough to remain with a losing

position he has no one to blame but himself. Brokers won't help.

Most financial planners do not understand how to protect a

client's money in a bear market. It doesn't even have to be a

bear market. Individual stocks go down and should be sold

when they don't perform in bull markets.

            If Mr. Investor was as smart as the professional trader

he would know to set a limit to any loss in a position. When in

doubt about how much to risk 10% from the highest closing

price is a good number. A decline of 10% means the equity

must be sold immediately. Do not wait for a rally to get out.

            There is an old saying about bear markets: "The one

who loses the least is the winner." Ten percent losses will not

hurt your long term portfolio.

            Until investors learn to sell they will never make money

in the stock market.