Humpty Dumpty had a great fall and all the Kings horsemen could not put Humpty Dumpty back together again.

The Stock Market has had a great fall and all the brokers, CEOs, analysts and politicians have not been able to get it back up again.

Oh, it will go up again, but if history has a way of repeating it will be a long time before we see it at even. From 1920 to the present there have been 3 major bull markets lasting close to 16 years. Unfortunately, each has been followed by a bear market of about the same length of time. So far we are ending the 3rd year of the projected down cycle with only 13 more years to get to the bottom. It is a long way off.

At a recent investment seminar one of the speakers asked his large audience if they believed the stock market would be higher 5 years from now. Every one except one thought it would be. The current mindset of most investors believes this also. For the period from 1982 to 2000 (18 years, close enough) there has been a bull market. Every investor has considered himself to be a financial genius during that time. There is an old saying, The market makes fools of us all sooner or later.

Unless you learn to listen to what the market is saying and not your broker, you will be able to recoup some of your losses, but probably not all. During this long-term bear called a secular bear market, your main effort will not be to make money but to keep from losing more. During a bear market the one who loses the least is a winner. You may not like what I say, but history has that strange way of doing it over and over.

Maybe I am wrong about it because this time it is different. I hope so, but you can protect your money in your 401K or elsewhere with a simple loss limit order. Call your broker and have him place a 10% (or whatever number your prefer) stop-loss order on all your positions. That way you dont guess about where to sell; you let the market tell you when it has turned weak.

Brokers and brokerage companies hate stop-loss orders and will try to talk you out of it. Ask him if he will guarantee your portfolio. You can bet he isnt that dumb. It is your money. Once it is gone you will have very little chance of getting it back. Protect what you have left.

Dont be a Humpty Dumpty!

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.