No. of Recommendations: 14
I don't know anything about Stocks 2006, but I want to comment on one thing:
Hopefully I would have enabled Stop-Limits to get out of the loosers long before they hit double-digit losses.
By this I would assume you would have set a stop limit, or maybe actually a stop loss, at 10%, right?
If you had done that, you would have been stopped out of quite a few of these stocks that went on to make good gains. I am interested in this topic, so I took the 11 stocks listed and assumed they were bought on 12/15/2005, and I "set" a 10% stop loss. Note that MRN's prices do not correspond with the prices you gave, so something is wrong, either the ticker or the prices. The results would be:
Stock DecAvg OctAvg Stopped? gain/(loss)
Symbol price price percentage
===============================================
AEOS $22 $46 No 110%
MRN $11 $17 May $4.50 ?????? This must be the wrong symbol
BRLGX $12.25 $12.50 July $11.16 (10%)
BAM $32 $44 No 44%
HOG $52 $68 June $48 (10%)
HW $36 $26 May $31.95 (10%)
MKL $315 $400 No 27%
OSI $40 $33 May $37 (10%)
PTEN $34 $23 Feb $30.25 (10%)
UNFI $27 $34 No 25%
URBN $26 $19 Mar $23.86 (10%)
Result: without stop loss, average return is 13.3% (ignoring MRN).
With stop loss, average return is 14.6%. Not much of a difference, and you'd have forgone a few pretty substantial gains.
Stop loss is not by any means a cure-all strategy. There are substantial risks in using them -- in addition to potentially not helping your returns, they can also be difficult to get executed when a stock is dropping. If using a stop limit, the stock could fall faster than execution can keep up and your limit never executes. If using a stop loss, you could end up finally selling at a lower price than the stop loss. Depending on liquidity and price mismatches, these could be small or large effects.
-Mike
