The stock market has been going up for the last three years. Are you rich yet? What most investors fail to remember is not how much you made, but how much of what you made you keep.

There were thousands of paper millionaires in 2000 who are wishing they had known when to sell at that time. Of course, hind sight is always 20/20. Is there any method that could have been employed that would have given an investor a chance to keep most of his money? Yes, but even if your broker had known about it his brokerage firm would discourage telling you.

If you had known and told your broker he would have pooh-poohed the idea and if his boss found out he was encouraging his clients to follow the method he probably would have been fired. It is a simple exit strategy used by all prudent investors during bear markets.

There are two ways to keep your money.

A simple trailing open stop loss order is easy, but requires your attention on a regular basis. You must first decide how much you are willing to risk. Many professional traders recommend 10%, but depending upon market conditions and type of equity it could be more or less. When in doubt 10% is a good number.

Another very excellent equity-protector is a simple moving average. The shorter the time frame the quicker a position will be exited. Also many stocks have a history of violent ups and downs. For the non-professional it is best to invest in no-load mutual funds and use a longer time period simple moving average.

Even a simple moving average must be mastered. Many texts on technical trading speak of action when the line is penetrated, but experience will teach the direction of the line is the key to the greatest profits.

A long-term 200-day moving average line used for mutual funds keeps the investor in the position as the line is ascending. When the line turns down the investor sells. The 200 line for mutual funds is not affected by the daily movements of the stocks within the fund,

Observation will prove that once a trend is in place either up or down it will last for a considerable period of time usually years. During these down periods the investor does not give back previous profits. That is the key to becoming wealthy with equities.

In recent years many smart investors have discovered bear mutual funds. These are very special funds that move in the opposite direction of the general stock market. 401K-type plans do not allow short selling, but do allow purchase of this type of mutual fund. Now the investor can make money while the market is going down as well as up.

Brokers will not help you with this plan, but it is your money. Unless you take charge you will never be able to answer YES to that important question.

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.