I am sure that if you have a brokerage account with a "full service" broker you have been getting calls about what to buy and sell. If you have big losses in certain stocks you might be hit with that great Wall Street lie to buy more so you can 'Dollar Cost Average'. It doesn't work.

In a recent study going back for 5 years a dollar cost averaging program was set up buying the S&P500 Index mutual fund. At the end of 62 months the investor had put in $31,000 and it was now worth $31,162. You would have done better in a savings account at your bank. And that assumes there was no commission or fees of any kind.

Let's say you owned a stock such as Cisco. This one is held by hundreds of thousands of investors and almost every one of them has a loss. It traded as high as $82 and for more than a year was in a range over $50/share. It was the darling of very broker from here to Timbuktu and when it started down they kept yelling buy more, buy more. Another one in this same category is Lucent going from about $80 to $5. Yuk!

Now Wall Street is trying to get you to buy more of these losers so you can "get out even" when it goes back up. And pigs can fly. Think about this. The person that currently owns these stocks or any similar ones with big losses is now waiting for them to go back up so they can "get out even". Ho boy. It should be extremely obvious that every time one of the monsters sticks its head up it is going to be hit with tremendous selling. There isn't a chance that any of them will ever get back to their old high prices or even close.

What does an investor do? Clean out your garage and have a yard sale. Get rid of this junk and put your money to work where there is a chance to make a profit. And don't buy any stock that has lost 50% to 80% during the bear market of the last 2 years. Brokers will tell you these are now "cheap" and are a good buy. Not a chance. There are too many people waiting to sell.

Now is the time to try to find a completely different equity that did not get hammered last year. Look for one that has a nice smooth upward pattern. Buy it and this time know how much loss you will be willing take if it goes down. How do you do that? Very simple. Use a trailing loss limit order called an open stop-loss order about 10% under the lowest price of the previous month - and keep moving it up as the price advances. That way you will not give back profits.

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.