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#1
10-16-2007, 11:01 AM
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Question for Buy n\' Holders
How much does a stock have to go down before you start to question whether you might have miscalculated?
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#3
10-16-2007, 11:07 AM
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Re: Question for Buy n\' Holders
I invest in companies I believe are undervalued. In this case, the stock price going down has nothing to do with me selling the stock - the underlying fundamentals are the most important. In fact, with no change in fundamentals or outlook, if a stock is a value at price x, and the price drops, I'm often happier.. now I can buy more of the company cheaper. If I'm right, the market will eventually come around.
OTOH, if the fundamentals change and the stock drops, I may very well change my outlook and sell the stock - but that's not at all related to any set % figure - it varies by company and situation so much that is very much a feel thing.
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#4
10-16-2007, 08:01 PM
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Re: Question for Buy n\' Holders
[ QUOTE ]
How much does a stock have to go down before you start to question whether you might have miscalculated? [/ QUOTE ] This is something you must consider before getting into the trade. It also depends upon your objectives.
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#8
10-16-2007, 10:55 PM
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Re: Question for Buy n\' Holders
[ QUOTE ]
[ QUOTE ] [ QUOTE ] When the fundamentals change [/ QUOTE ] [/ QUOTE ] seconded. [/ QUOTE ] Its funny cause that statement has turned into somewhat of a cliche` but holds so much truth. If you really need a number, then I would say 10% would be a reasonable stop loss.
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#9
10-16-2007, 11:31 PM
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Re: Question for Buy n\' Holders
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] When the fundamentals change [/ QUOTE ] [/ QUOTE ] seconded. [/ QUOTE ] Its funny cause that statement has turned into somewhat of a cliche` but holds so much truth. If you really need a number, then I would say 10% would be a reasonable stop loss. [/ QUOTE ] I'm not sure these ideas are very useful for OP. The fundamentals are changing all the time, so OP needs to decide what specifically would need to change in the fundamentals of his stock before an exit is triggered in his investment. I'm not a fundy investor, so I don't know much about this. Also, picking a % drop in price isn't very useful either, as we don't know what market OP has his money invested in. If he is going to employ a stop-loss, then instead of a blanket 10% trailing stop, a volitility-adjusted stop would be more appropriate and is very easy to calculate using ATR. I believe IBD uses an 8% trailing stop which is a very basic exit. Since most buy and hold investors are closet long-term traders, this stop can be improved upon quickly and simply. For closet long-term traders, your exits are more important than your entries and so need very careful consideration before any purchase is made. If you're using fundamentals as set-ups for purchase, then it would also make sense to use them to set-up an exit. A trailing stop helps protect your gains/capital when you're proven wrong. [ QUOTE ] When it starts to hurt. [/ QUOTE ] This is emotional trading and is guaranteed to make you buy and sell at exactly the wrong time. Your onjectives should help you plan to either sell before it starts hurting, or hold on through the hurt.
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#10
10-19-2007, 10:30 PM
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Re: Question for Buy n\' Holders
sell when the reason you bought has changed for the worst
sell for a tax loss to offset a gain sell if you need that money for a better bet or cause sell if the company is being raided by management
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