Flip a Coin

By Al Thomas

When you flip that coin the chances are 50/50 it will come up either heads or tails.

If you are in Vegas West they shave the odds a bit so your chances are lessened by 2% to 5%. If you are playing that game in picking stocks in Vegas East your chances are a long way from 50/50.

As a former exchange member and floor trader for 17 years it is my contention that 90% of people who are trading (Wall Street likes to call it investing) will lose money. And that includes most accounts with professional managers in mutual funds and hedge funds.

Why? They claim they are going to make money for you. Thatís after commissions, research, office expenses and their profit. Has anyone of those geniuses explained that before you wrote your check? I didnít think so.

You know I always lay it on you straight. There are no sure things. Finding something with a good return and low risk takes a lot of looking. I am always looking.

When I was a floor trader I lost on about 40% of my trades. But the secret is one your broker or fund manager wonít tell you. ďNever take a BIG loss.Ē Few of them will get out when the stock is flushing down the toilet. ďItís gonnaí come back.Ē And pigs can fly!

When the investor has a good trade on he should not try to pick the top. The smart way professionals do is put in a trailing stop loss order and let the market say when it is time to exit. For some reason brokers wonít do this. Find another broker!

Fortunately, I am a pretty good trader for myself. I tell investors what I am doing with my money. If they want to follow me thatís OK, but I donít want to manage. Even in 2008 I made 10%. Not much, but better than taking a 45% hit like the S&P funds.

I have also had some very good luck with real estate which I also have now. Recently found one that pays 10% and I donít have to manage it.

I am getting ready for the next crash. The bubble is about to burst again. It is my opinion this one will be worse than 2008. Cash in your mattress or very good stops on all your positions are where every smart investor should be. No, I donít know exactly where the high will be. Tomorrow or next year? But buying now has more risk than reward. Your choice.

Or ÖÖ. Flip a coin.

Al Thomas' new book, "If It Doesn't Go Up, Don't Buy It!", 3rd edition, has helped thousands of people make money and keep their profits with his simple 2-step method. The method made 10% during 2008. 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.

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