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Topic	Stock Topic 26
red sox 777 03/25/21 5:40:04 PM #46:	Zachnorn posted... I'm considering putting in another 4k into my account and buying up some of these NASDAQ stocks while they're cheap and setting up 5-7% stop losses in case they drop too much more. Looking at my portfolio, my losers that wiped out my gains in other stocks were the ones I didn't put such a stop loss in so they fell 15-25%. I don't understand options and don't want to play with something I don't understand yet. "Buy low, sell high, get dividends if you own it long enough" is something my small stock market brain can understand though. Going back to this, I would suggest not setting stop losses, basically ever. If you think a stock is a good investment at a certain price, why would it be a good sell at a price 7% lower? Unless you think something has changed about the company or the market, the price going down is a reason to buy, not sell. If you're not comfortable having a lot of money at risk without a stop loss to limit losses, that's a sign maybe the initial purchase price was too high, or you haven't diversified enough. With a stop loss, you will likely lose the amount of the stop loss on most trades, and 5-7% itself is not that big, but repeat a few times and it can become quite big. You can lose money even while the stocks you are investing in are flat or even going up, because you are missing out on the gains while eating the losses. Stocks falling 15-25% is normal. Warren Buffett has said (paraphrasing) that if you aren't emotionally able to handle a 50% drop in your stocks, investing probably isn't for you. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest! <cite>red sox 777 posted [p:952112189] in Stock Topi... [t:79367303]...</cite> <quote>Zachnorn posted... </cite> <quote>I'm considering putting in another 4k into my account and buying up some of these NASDAQ stocks while they're cheap and setting up 5-7% stop losses in case they drop too much more. Looking at my portfolio, my losers that wiped out my gains in other stocks were the ones I didn't put such a stop loss in so they fell 15-25%. I don't understand options and don't want to play with something I don't understand yet. "Buy low, sell high, get dividends if you own it long enough" is something my small stock market brain can understand though.</quote> Going back to this, I would suggest not setting stop losses, basically ever. If you think a stock is a good investment at a certain price, why would it be a good sell at a price 7% lower? Unless you think something has changed about the company or the market, the price going down is a reason to buy, not sell. If you're not comfortable having a lot of money at risk without a stop loss to limit losses, that's a sign maybe the initial purchase price was too high, or you haven't diversified enough. With a stop loss, you will likely lose the amount of the stop loss on most trades, and 5-7% itself is not that big, but repeat a few times and it can become quite big. You can lose money even while the stocks you are investing in are flat or even going up, because you are missing out on the gains while eating the losses. Stocks falling 15-25% is normal. Warren Buffett has said (paraphrasing) that if you aren't emotionally able to handle a 50% drop in your stocks, investing probably isn't for you. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest!</quote> ... Copied to Clipboard!
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