Dont you love those ads in the paper and on TV saying how much their mutual fund has made over the past 3, 5 and 10 years? I get all choked up. Hind sight is always 20/20. If Mr. Investor had known that he would be in clover today, BUT ..

It seems that during the past few months, in fact for more than a year 90% of all mutual funds are lucky to be even. Even. Even doesnt cut it so what can an investor do when the market starts down as it has been doing lately? The Dow Jones Industrial Average has lost 500 points. What if it drops like it did in 2000 when the NASDAQ lost 78% of it value and 7 trillion (yes, thats a T) dollars.

Will your broker call you to tell you to sell? Did he tell you that last time? According to statistics less than 2% of Wall Street recommendations in that bear market were to sell. Is the tune going to change this time? Hardly. You are on your own again. Either you take charge or you will lose your money.

Some people run to Morningstar for mutual fund recommendations. If you will look at their 5-Star Mutual Funds you will see they sank into the slime along with all the others. Morningstar follows the Wall Street line so you cant rely on them.

Who can you rely upon to protect your investments?

One person.

YOU!

Dont tell me you cant do it because you dont know enough. Obviously any blind hog could have found more acorns in the years 2000 to 2003 than your broker.

The first consideration is protection of what you have now. If the fund you bought at $20 went to $40 would you be happy if it went back to $20? Not really. So you have to decide right now how much you are willing to give back. One of the basic rules of thumb is 10% from its highest closing price. If it drops below $36 sell it because you dont know how far down is. This is protection against a major loss. If investors will look at the history of the funds they own they will see that a 50% loss is common and that means the investor would have to earn 100% to make up for that loss. Fund managers usually arent that smart.

The professionals let the market tell them when to get in and more importantly when to get out. The great secret of the stock market is not buying. It is selling. Investors who have an exit strategy are those who end up with big money. There are many good exit methods, but they must be put into place and acted upon when the appropriate time occurs.

There are many good long term investment plans and all of them have periods when the best investment is cash.