Very few investors make money in the stock market.

Wall Street will deny this, of course, but look at where your account is today compared with what you had at the beginning of 2000. Don’t count what you have added during that time or interest income. Most folks are still running a loss.

Your broker, if you are unlucky enough to have one, will assure you that the market always comes back and you are in for the long haul. So don’t worry, be happy. Is your name Alfred E Newman?

If you were one of the few (about 1%) who had a broker or financial planner that actually knew how to protect your money you would not have lost a huge portion of your portfolio from 2000 to 2003. The Wall Street mavens do not teach their brokers the simplest technique for account protection. And they never will.

So, you have to learn to protect yourself! It is a lot easier than you think and most brokers are not even aware of it. Even if they were their company would not allow them to implement it.

Let’s suppose you have been reading my column for the past few years and I showed how to know when the stock market was a buy. The buy signal was April 2003 and you are still long today. About 80% of 401K portfolios have less than $50,000 so here is how to set up this money management technique.

It was time to buy. Divide the portfolio into 10 equal parts. Select 10 mutual funds and/or exchange traded funds (ETFs) that have quit going down and are now going up and buy these. This doesn’t have to be done all in one day. Spread it out over the next 2 or 3 months as good equities present themselves.

Here is the key. Don’t lose money. Ha, ha, you say. Place a 10% stop loss order on each fund that was purchased and as each fund advances raise the stop every month. The investor has 10 separate positions with a 10% risk on each one. If the selection of the fund was poor and it goes down instead of up the loss is one percent (1%) of the total portfolio.

The investor has been smart enough to diversify into several sectors so the chance of losing in all 10 positions is very small. Do not buy individual stocks. Few investors are capable of choosing company stocks. Let the mutual fund manager do that. Buying no load mutual funds there is no commission and even smaller fees in exchange traded funds. As stops are hit find other good equities that are going up. When the market turns down you will be in cash as you will have been stopped out of all positions with nice profits.

Brokers don’t know any more that you do (and I’m not kidding) so you pick the no load funds and ETFs you like.

This simple strategy will spread risk, prevent large initial losses and prevent giving back profits as they are made.

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 http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved