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The Alchemist (01/30/2008)
By Al Thomas


You and many thousands like you have been on the phone this week calling your broker or so-called financial planner asking, "What is going on?" Should I sell?" The answer is written in their playbook put there by the big Wall Street private interests. Let's quote a few of the sentences the poor (at least soon to be) investor is going to hear:

"This is only a correction."

"Don't worry. The market always comes back."

"Diversify into XYZ (or some other dog)."

"Buy more now and dollar cost average"

"You are in for the long haul."

What you won't hear, "I have no idea what is going on."

He can't say that. He is supposed to be an expert. The truth is none of the brokers are taught to protect customers money. They are only taught how to get investors to send money to the brokerage company. Then the broker will use his "expertise" to help (sic) the investor put it to "work". Pardon the quotation marks, but that's to have you understand that those are lies. The brokerage company is not there to help you make money; they are there to make off you.

For years I have been preaching in this column and in my books that every investor and every broker and so-called financial planner must have an exit strategy. Do you? Does your broker? The guess is 99% do not. If they don't then plan on losing the money - over the long haul. It is a long way to the bottom from here.

Is it too late to sell? Go back to 2000. After the first break= down everyone wanted to sell so they decided to get out "even" in the next rally - that never came. The NASDAQ dropped 78% and many folks lost almost everything they had saved. The wait-and-see, get-out-even philosophy is for losers. Don't plan to retire.

This is a major bear market that will last several years. Many companies will go under and their stocks will become Worthless. Hopefully none of the stock you own.

There is one other statement you will never hear from your broker: "CASH is a position. Sell now" He can't say that or he will be fired. Brokerage companies make money even if the investor doesn't trade. It is only about 1/1/2 to 2%, but if investors went to cash in a money market the broker makes nothing. This is how Buy and Hold makes money, but not for you.

It is my very strong opinion that we are in a long term bear market. Stocks will lose 40% or more of their value. Mutual funds will be hit the hardest because they are required to remain fully invested even when the manager might know there is nothing to buy and is not allowed to sell.

The only safe place for money for the next year or longer will be U.S. Treasury Bills or an ETF (Exchange traded Fund) called Power Shares Laddered Treasury Portfolio, symbol PLW. Even your mattress will be better than the stock market.

Are you in "for the long haul"?

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter and receive his market letter at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.

Copyright 2008 All rights reserved.



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