STOCK INVESTMENT Most all of the above stocks were still paying dividends when they had declined 25 to 50 points from the top and they no doubt looked attractive to a lot of people who bought them either on margin or outright. How many men will have the nerve to hold on when they see their capital shrink from 50 to 75 per cent? Very few of them, and a man would be a fool if he did. This is another proof that you must place a stop loss order for your protection, because when a stock starts to go against you, it certainly can go enough to cost you all of your margin and exhaust your patience, causing you to sell out, probably just at a time when you should buy. I have not picked 1919 as an exception of a Bull market or 1920 and 1921 as exceptional Bear years, because they are not. These same kind of declines have occurred in 1857,1873,1893,1896,1903,1904,1907,1910,1914, and 1917, and they certainly will occur again. Therefore, be a Bear in a Bear market and a Bull in a Bull market. Don't forget the fact that when stocks start to go against you, they can go a long way in either direction, and that the man who buys outright near the top and thinks he is safe, or the man who sells short near the bottom and puts up 50 points margin and thinks it is enough, can both be wiped out. You might argue that a man who buys outright in panic years near the bottom is perfectly safe and doing the right thing. My answer is that the man who buys on margin at the bottom of a panic is just as safe and can make more money because he can carry more stock and I intend to teach you how to tell when stocks reach top or bottom. SELLING SHORT I am not going to tell you that it pays to sell short; I am going to prove it to you by indisputable records covering over thirty years of market movements. A lot of people trade in the market for years and never seem to realize that there are two sides to it. I have often heard people remark when stocks were declining fast, "I can not sell short." The man who is a born Bull, chronic to the core, will never succeed; neither will a chronic Bear succeed any better. You must have no sentiment in the way you make money in the market. Your aim and object should be to make profits and you should have no choice of how you make them, whether it be on the buying or selling side. The Royal Road to Success is to be a Bear in a Bear market and a Bull in a Bull market. If you only trade on the Bull side of the market, you have 50 per cent more against you than if you trade on both sides. What chance has a Bull in Bear years or years of panic and depression? He may buy near the bottom of a break, but unless he grabs profits quick, he will soon have losses; while the Bear who sell stocks short on every rally, covers them on the breaks and waits for rallies to sell again, is sure to pile up big profits because he is going with the trend, which you must always do. Study the charts and convince yourself that at the right time there is just as much money on the short side as there is on the long side. Then make up your mind, if you expect to succeed, that you will sell short when conditions warrant. Your friends, brokers, and the newspapers tell you that it is dangerous to sell short; that there might be a "corner." The chances for a corner in a stock are about one in a thousand. There have been only two important corners in the last 30 years, — Northern Pacific was cornered in 1901, when it went from 150 to 100o per share; Stutz Motors was cornered in 1920 and advanced from around 200 to around 700. stock trading advice ~ forex day trading |