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Was anyone using live quotes when the market tanked?

I thought something awful happened. So much red it looked like Christmas, I just can't figure out the "herd mentality" , but, it makes for great buying opportunities.

Ak, investing on a rainy day, in the hills north of Fairbanks.
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I thought something awful happened. So much red it looked like Christmas, I just can't figure out the "herd mentality" , but, it makes for great buying opportunities.
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Tell me about it. All these down days is destroying my confidence, but I just can't swallow the idea of selling out a bunch of stock now to lock in these losses. At this point I'm afraid to buy, because it just seems like there is no end to this, and on the other hand I feel like I'm too late to start shorting without a near term rally hurting me also.

Wishing I could make up my mind,

Billy
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Whenever you enter a position, long or short, longterm or shortterm, ALWAYS have a Maximum Acceptable Loss determined. If that maximum acceptable loss unfortunately occurs, DUMP the position. That way, the acceptable loss is guaranteed to not become an UNacceptable loss.

Never say "It's gotta go back, it's gotta!" because it ain't gotta.

Set those Stop Loss stops - observe them WITHOUT fail and without emotion - mechanically leave a losing position and have your bucks available for another day.

[from one who, for some unknown reason, allowed WAY too many dot-bomb "investments" to depreciate not only back to the buy-in point, but 90+% below the buy-in point before he said "What ARE you doing!?"...]
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Set those Stop Loss stops - observe them WITHOUT fail and without emotion - mechanically leave a losing position and have your bucks available for another day.
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I agree, unfortunately last year when I started this game, I thought BuyandHold.com was cheap. Now I realize they are not only not cheap, but their system sucks, at least for short term moves and bear markets. Not only that, but company does not offer any limit, stop orders or margin accounts, which means no short selling. It took me about a year, but I finally had enough of that, so now I use Interactivebrokers. The difference is like night and day.

Billy
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[BuyandHold.com] does not offer any limit, stop orders or margin accounts, which means no short selling.

Uh ... OK, this is rude and I apologize in advance for that, but it just seems like the clearest way to phrase it. What part of Buy and Hold did you not understand?

Talking about setting and religiously observing a stop loss is one approach to investing. But there are also those of us who really do just hang on and hang on and hang on. This assumes of course that the company continues to look like it will eventually be worth having held. So generally I try to buy only what I'll be willing to hold on to for a really long time. Or to risk losing altogether. (Note: well ... except for those shares of RSAS I picked up last year only to bail out a few months later. I am sooooooooooo happy I bailed out of that sick puppy when I did. ;-)

Now and then I consider trying to get a better return on my money by selling my longs and going short before a market dip. Then later covering and going long again before the market goes back up. But this stategy always seem to work better in my mind than in fact.

-john in Ithaca who would love to be a successful alpha trader, but who can't ever seem to walk the talk. :-)
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Yes, it did sound oh so bad, but so right. Folks really, really need to understand what they are getting into.

On the stop-loss-no-matter-what, I have to take exception in a market like this. These radical price moves are more like the actions of lemmings than rational humans. Now I understand the talking heads referring to the market like it was a sentient being.
When one spends serious time studying a company and makes a good sound decision to buy, and the price drops $5 in 2 days with absolutely no reason, I have no doubt it will come back. And probably within a few more days. I am not a buy-and-hold-at-all-costs type either, boy my hubby was, I finally got him to give up on awful Mutual funds we were in and I have to get the money re-invested.

I buy top of their field companys with a few gambles to spice things up. After being down for over 3 years with the Funds, making $2 on a $5 stock in a week is pretty impressive returns. And the gain is locked in when I sell. Of course these ones are doing great, it's crazy out there!
So, I have $1800 more to get working for me, any ideas? I am being aggressive with these funds, already have a solid base of indexes and core stocks and 4.5 years to go.
Ak, feeling like the market is a carnival ride, in the hills north of Fairbanks. (But it's been raining so nuthin' else to do)
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On the stop-loss-no-matter-what, I have to take exception in a market like this.

Different strokes for different folks. In my case, I have no doubt that if I placed a stop-loss in a market like this, the stock would take a one day price dip which triggered the stop-loss. And then it would immediately jump back up. So I'd be sold out at a loss, but the stock would not have crashed. Yuck!

As for ideas ... no, not me. That's why I'm lurking around on MF ... because I haven't a clue myself as to what to do. The only thing I seem to get a positive return on lately is bond mutual funds. But that'll change as soon as interest rates start rising again. If only I knew when that was going to happen ... ;-)

-john in Ithaca
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On the stop-loss-no-matter-what, I have to take exception in a market like this. These radical price moves are more like the actions of lemmings than rational humans. Now I understand the talking heads referring to the market like it was a sentient being.
When one spends serious time studying a company and makes a good sound decision to buy, and the price drops $5 in 2 days with absolutely no reason, I have no doubt it will come back. And probably within a few more days. I am not a buy-and-hold-at-all-costs type either, boy my hubby was, I finally got him to give up on awful Mutual funds we were in and I have to get the money re-invested


You mention the price of the stock going down $5 in 2 days for no reason....there is always a reason, people are selling, the real question (IMHO) is "Why are they selling"? Taking profits? Info we don't have?

So what is your acceptable loss?

Jean




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>>>>>On the stop-loss-no-matter-what, I have to take exception in a market like this.

>>>>>>>>>>Different strokes for different folks. In my case, I have no doubt that if I placed a stop-loss in a market like this, the stock would take a one day price dip which triggered the stop-loss. And then it would immediately jump back up. So I'd be sold out at a loss, but the stock would not have crashed. Yuck!

Then I would think the stop was at the wrong place. If you're long a stock in "a market like this" I would think the stops are especially important. I would sure be interested in hearing what stocks you think are so great you know they will go back up?

Jean
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Then I would think the stop was at the wrong place.
Oh, yes, I agree completely! (How could I not?? :-) Looked at that way, I guess I'm saying I'd always have no faith in my ability to pick the right stop-loss price.

I would sure be interested in hearing what stocks you think are so great you know they will go back up?

Ohhhhhhhhh. I misunderstood before. So all you're asking is, "Hey, [F,f]ool, so what's in your wallet?" Well, as far as stocks go, I currently have the longs listed below.

CAVEAT EMPTOR! These are not recommendations I'd never recommend that anyone do what I do since I don't trust my decisions that much. But if all you want is a FYI, here it is:

~1200 IBM (employee stock purchase plan ... over time it accumulates)
600 MSFT
~350 VZ
and in the totally, completely idiotic speculation category
426 CA
7500 ADBL

The ADBL is no doubt a tax loss waiting to happen. But I use their service and I think it is a good one. Every now and then I just want to put my money on a really, really, long shot. Not rational. Certainly not Foolish, I would expect. But there it is ...

So, you can see why moving more of my money into bond mutual funds might be a prudent thing ... no? <g>

-john in Ithaca
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"Then I would think the stop was at the wrong place. If you're long a stock in "a market like this" I would think the stops are especially important. I would sure be interested in hearing what stocks you think are so great you know they will go back up?"

In my book if your "long" a stock, you do not blindly put a stop order on it, you follow it carefully, for just "a market like this. Being long means you believe in the long term growth of a company, understanding that their will be ups and downs, you just have to find out if their is a reason for the down or just an anomally (sp?) like the last few days - weeks.

"I would think the stops are especially important. I would sure be interested in hearing what stocks you think are so great you know they will go back up?"

Disclaimer, I do not represent the companys and I DO have a financial interest.


At Todays closing prices: COF, and it is back higher than what I bought up $43, WGO, doing very well- through all this mess up $266, MNC, not screaming, but it will make me some money , RMCF up $37, (yum!, I buy what I like, after looking over the stats, of course.) ALLY, excellent gains up $125.10, RINO, up$57.10...several more. All but 2 of my stocks took serious dips over the last 3 days, but have come back higher than what my buy prices , including transaction fees, these are the total increase in $ value at the end of the trading day. Several of them were much higher during trading, but I am sticking for the same reasons I bought them to begin with, they will make me money, which is what it's all about.
I have a few core stocks that I am long on, and I mean years, and of course, everyone's mutual fund, and an international fund, a floundering growth fund, (hubby believes in it, sigh..) and the fund I just got out of and am investing the $ the way I want to.

If I had a stop loss order on COF, say down $5 from my purchase, It would have sold at the loss and I would have missed the now $43.00 gain. And lost over $500, doesn't work for me. But:

"Different strokes for different folks. In my case, I have no doubt that if I placed a stop-loss in a market like this, the stock would take a one day price dip which triggered the stop-loss. And then it would immediately jump back up. So I'd be sold out at a loss, but the stock would not have crashed. Yuck!"

Exactly.


Interesting thought: How 'bout those fund managers touting "buy and hold" when their funds turnover goes to 206%, and cash to over 7%. Humm,My new mantra: "Nobody cares more about my money than me", this is the most important thing I have learned on the Fool, along with some excellent conversation.

Ak, finally, really in control, in the hills north of Fairbanks.
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A Stop Loss stop for ANY type of trade - long, short, longterm, shortterm - is a very good idea.

Period.

The person doing the trading decides on what is a maximum acceptable loss. If that maximum acceptable loss unfortunately happens, the position is dumped.

There is no "Well, maybe a little more".

There is no "But but but it's gonna go back again - I know it!".

The position is dumped.

Period.

And all one loses is one's OWN idea of what a maximum acceptable loss is.

No more.

Use Stop Loss stops - observe them unemotionally and mechanically.

Save your money for a later play.

[sure, everyone can say "But with Example X - see! - the price went back and I would have missed out on megabucks!" - too often what isn't said is "Yeah, I decided to extend my stop a little further and a little further and I kept losing more and more"]
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I must respectfully disagree. I have never believed in mechanical investing, every situation is different, I will always annalize every change in the market and my personal investments, I am lucky to have the time for this, and the companys I invest in are selected with an eye to future growth, unlike you (as you stated in your interview) I do not gamble any more than is inherrant (sp?) in the market.

I do not go into the stock with the thought of "I can afford to loose this much" which is what an automatic stop loss is. That is the same type of attitude that gets folks in Vegas in trouble.

I am not saying that there is not a time to bail, just that every situation must be fully analized.

My intent is to make money, I have no problem riding out swings, as a matter of fact, I look on them as serious buying opportunities (after investigation, of course). The rule I prefer to follow is buy good companys and watch them carefully.

I am curious to know how many of your stops triggered Friday.
Also, how do you determine you stop loss amount?

Ak, enjoying the differences of opinion, in the hills north of Fairbanks.
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A rule of thumb, highly debateable, is that a loss of 2% should be sufficient to get one to drop one's position.

The idea is: the position is losing money, it may lose more money, one gets OUT of the position and waits, if the position continues to spiral downward - great, if the position returns to the good size then one can contemplate getting back in.

Under worst cast conditions, one loses a small delta.

Under best case conditions, one loses a small delta.

Holding onto a losing position as it loses more and more with no limit is ill-advised.

[from one who bought CMGI at about $85 and sold it at about $3...]
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Holding onto a losing position as it loses more and more with no limit is ill-advised.

[from one who bought CMGI at about $85 and sold it at about $3...]


ditto from one who bought WCOM at 35 and is still holding! Please don't tell anyone! An expensive lesson, for me, but I did learn!

Jean
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Yeah, really expensive education!

When I look back on my "investments" and how I handled them I am, frankly, simply aghast!

I just don't understand HOW in the WORLD I could have kept holding them!

Duh...

So now I religiously observe Stop Loss stops and preach them as well.

Get out with a relatively small loss - save yer bucks for another day.

From one who lost MULTIPLE fortunes because he didn't do just that.
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... a loss of 2% should be sufficient to get one to drop one's position.

If you're suggesting setting a sell-stop just 2% below your purchase price, that's silly. That's way too close - given today's volatility, you'd be selling out of many positions within days of your purchase. I do think that setting a stop limit is sensible in many cases, but it probably ought to be more like 10-15% below the current price.

Lorenzo

(Who rode both LU most of the way down, and who recently closed out INTC)
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The theory is that one can ALWAYS get back in again - get out at -2%, back in again after -10%.

Not sure where the 2% came from (Daytrading board's number!) - probably just a reflection on what average return is expected, thus what average "loss" should be.
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You can always buy protection with a "put" but it probably costly (commissions) with a 100 share transaction and one put. Maybe doable with 1000 shares and 10 puts.

For example:

Buy a stock at $25
Buy a put with a strike price at $25

Also the put has a time limit but some stocks have options going out years. A long term put option cost more than a short term put option.

At least you are protected if the stock goes down at the cost of the put option plus commissions before the expiration of the put option.

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