Losing Money in Stocks?

Sat, 11 Apr 2009 10:44:00 EST

Football coaches never predict the outcome - they expect to win! The coach runs the best plays he can, when he's got the ball.

And when he doesn't have the ball, he sends the defensive team onto the field. And so it should be with your investments.

Trying to predict (guess) where the market will go is like trying to predict who'll win the Super Bowl before training camp starts; it's a waste of time.

Look, if you want to get wrapped up in the crazy headlines from the media, be my guest: Credit crisis, bankruptcies, wild market swings, etc. It's there for shock value, and ratings. It's all a waste of time, and will take your eye off the ball.

On June 26th one of the primary tools I use, the NYSE Bullish Percent, indicated to me the defensive team should now be on the field. This meant moving from "wealth accumulation" to "wealth preservation" strategies.

And after a few weeks, the market started to fall.

You know, sometimes the "winner" in a bad market is the person who lost the least. That's really what wealth preservation (defense) is about.

Almost anyone (except my mother-in-law) can make money in a good market. But there are a lot of ways to lose money in a bad market. Don't become a statistic.

Defense isn't about predicting where lightning will strike; it's about being prepared for an approaching storm.

How do you prepare?

So...where will the market go from here? That's a trick question! Don't waste a minute on that. Getting prepared is a better use of our time than making predictions.

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Losing Money in Stocks?