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I believe in the market. I believe in me.
-- Beaver Cleaver

You say the corporate world is falling apart? That fraud, greed, and corruption are running rampant, and white-collar ethics are nowhere to be found? That our pillars of society are crumbling into dust, revealing their human feet of clay?

You say we're now living in a brave new world in which a July 4 incident at a major airport in which three people die and many are injured is considered minor because people are thankful there wasn't another major disaster?

Well, then, let's briefly escape these cruel realities and travel back to a more peaceful, innocent and secure time, shall we?

Let's turn back the hands of time and join the family of Ward and June Cleaver from "

Leave It to Beaver."

In an actual episode, "Stocks and Bonds" -- episode 194, if you're curious -- Beaver and his brother Wally become interested in the stock market through a high school economics class Wally is taking. When Wally asks for help from his father, both Ward and June encourage the boys to learn firsthand about the market by investing some of their hard-earned savings.

Wally and Beaver love the idea of getting rich, and each puts in $25, the total of which is then matched by Ward. The boys can't wait to watch their $100 of capital grow into some real dough.

Ward tells them to do "careful research" to pick a company they want to buy. For them, this means picking a company based on its name. They consider

AT&T

, but Wally says it's too expensive. While Ward guides them toward a nice, conservative utility, like the local Mayfield Power and Electric Company, the boys have a highflyin' tech stock in mind. This risky notion is introduced by Wally's manipulative friend, Eddie Haskell, who encourages them to go for a penny stock named Jet Electro, selling for 50 cents.

This company, Eddie informs them, is sold "over the counter" where all the fast movers are. He prompts them to "blast off" for the stars with a tech company, not some stodgy old utility that doesn't move. But the boys follow Ward's advice and buy Mayfield Power and Electric through his broker.

Slow and Steady Wins the Race?

Each evening, the two boys look excitedly in the paper only to discover that their stock is stuck in the mud, while Eddie Haskell's highflier is moving a quarter to a half-point every day. It eventually goes from 50 cents to $2.50, and the boys can't take it anymore; maybe Eddie Haskell was right for once, they think.

So they complain to their father and tell him they want to sell the utility and buy Jet Electro. Impressed himself by the big move in Jet Electro and concerned that his image as the wise father is being tarnished, Ward goes ahead and orders the trade with his broker.

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After a few days of making money on the new tech stock, the boys learn from Eddie that there was a sudden cancellation of defense contracts and Jet Electro has taken a dive. It drops hard from more than $3 down to 75 cents. Wally and the Beaver are devastated. They are, as Beaver puts it, "financially ruined."

Now here's the good part: Unbeknownst to Wally and the Beav, Ward had put in a stop-loss order on Jet Electro at $2.50, the price at which the boys had bought it. So they ended up getting out by the skin of their teeth with no loss. And Ward had also told his broker to repurchase Mayfield Power and Electric (which had, as Ward gleefully points out, now jumped up 50 cents) if the stop-loss was triggered. The two boys end up thinking their father is a market wizard for having had the foresight to protect their investment. As Beaver might say, "Gee, Wally, Dad knew what a stop-loss order was way back in 1962!"

This episode from the early '60s contains some lessons about investing that still apply today, including the following:

the need to go beyond catchy names and concepts and do thorough research before committing capital;

how easy it is to enter the market with high hopes but inadequate capital;

what can happen when you place your bet on just one risky stock rather than diversifying, especially when you have only a small amount to invest;

how the slow and steady approach of buying a solid, reliable company is often better than the tendency to be greedy and take too much risk in hopes of making a quick profit;

the importance of setting stop-loss and limit orders to protect yourself from volatility;

how news can bite you at any time.

Thus Wally and the Beav learned at a young age not to mess with those highflyin' tech stocks -- especially the ones that are selling for less than a dollar!

Steven J. Hendlin, Ph.D. is a clinical psychologist in Irvine, Calif. He has been in private practice for the last 26 years, investing for the last 20 years, and actively trading online as a position trader and long-term investor since 1996. He is the author of

The Disciplined Online Investor and maintains a site at www.hendlin.net. He is pleased to receive your comments and questions for publication in his public forum columns at

steven.hendlin@thestreet.com, but please remember that he is unable to provide personal counseling or psychotherapy through the mail.

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