Chapter 23. Ten (Or So) Ways to Protect Your Stock Market Profits

In This Chapter

  • Using long-term investing strategies

  • Considering orders, triggers, and options

  • Selling your stocks if you absolutely must

Whew! When you see the headlines out there, you tend to think that your money is like a balloon in a room full of porcupines — headed for trouble. Fortunately, successful stock investing (or just plain avoiding losses) isn't that difficult to accomplish, even in a crazy market. This chapter lists some things to keep in mind when you want to be defensive about your hard-earned stock market profits.

Accrue Cash


Always try to have some extra cash on the sideline no matter how tempted you are to be 100 percent fully invested. You never know when buying opportunities may show up, especially in stocks you already own. Being in cash is its own form of diversification away from market risk.

Spread Your Money across Several Stocks


You should never have too much tied to a single stock because it's too risky. Spread your money elsewhere. As a general rule of thumb, you shouldn't have more than 10 percent of your financial assets tied to a single company.

Buy More of a Down (Yet Solid) Stock


Gadzooks! Your stock just went down like a lemming off a cliff! What a rotten day in the market. Now what do you do? Well, if you've chosen well (profitable company, good industry, and so on), then why not buy more? If you bought a solid, profitable stock at $44, then why not buy some more at $33? That ...

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