I love roller coasters. The steeper the better. High and fast and curvy. Yahoo! Lets go again. But to get to the drop off point you have a slow grind up.

Kinda reminds me of the stock market for the past 3 years. From 1982 to 2000 it was 18 years of up, up and away with very little down. From 2000 it was over the edge, down, down, down with few hints that we are going up. Recently, since October, there has been a respite and we have seen an advance of about 25%. Can we get back to the top? Gosh I hope so, but I have to remember this is a roller coast and it goes back to where it started. Oh, NO! That is OK for amusement rides, but in the stock market that is not amusing.

In the roller coaster I expect to be let off where I got on, but in the stock market I want to stay up near the top because if I dont I will lose my money and that is no fun at all. Is there any way I can protect my money when I am near the top and not give it back to go to the bottom where I have to start all over again?

The first thing you need to know is whether the stock market is going up or down. Despite what Wall Street tells you this is relatively easy to do. I know because I have been doing it for years. Here is one simple way and wont require any work on your part. In the Investors Business Daily newspaper there is a Mutual Fund Index. When the price of the index is above the 200-day moving average the market is going up and you will want to be a buyer of stocks and mutual funds. What you buy is up to you. When the price of the index is below the 200-day line you should sell out of everything and be in cash, money market account or bonds. That simple. Anyone can do it.

One of the big Wall Street lies is that you cannot time the market. Wrong. If you dont believe it you can prove it to yourself by doing a historical study of what I have just said. Buy as many shares of the S&P500 Index as you can with $10,000 starting back in 1998 and sell the shares each time you have a penetration of the IBD Index. Buy and sell going back as many years as you like. Now compare the amount you have using this method with that same amount if you had just bought it and held it continuously.

I wont tell you, but you will be in for a shock. Buy and hold will show a loss while getting off the down roller coaster each time weakness occurred you would have protected your investments.

Roller coasters can be fun, but not in the stock market.

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.