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#12
10-28-2005, 12:44 PM
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Re: Just bought my 1st 2 stocks
Stop losses dont' make a lot of sense. If the stock falls, you should obviously re-evaluate the situation and then make a decision. You might decide you'd like to buy more of a stock at the lower price.
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#13
10-28-2005, 01:37 PM
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Re: Just bought my 1st 2 stocks
[ QUOTE ]
If you are playing the fundamental game, and you are truly doing your homework, then buying as a stock goes down and continues to go down may make sense. But most people, do not evaluate their stock purchases enough to know when a stock going down is still a value as opposed to a negative change! New players to the stock market that don't do their homework, as well as short term traders... MUST use stop losses!... to control their risk! [/ QUOTE ] Even though I think stop losses are silly, this advice is actually pretty good. If you can read and understand a quarterly report, understand the balance sheet, income and cash flow statements, you can estimate intrinsic value. Even if you have uncertainties, you can give yourself a large margin of safety. In that case if you buy below your margin of safety, it's foolish and counter productive to have a stop loss. But if you don't understand IV, or can't read financial statements well enough to estimate one, a stop loss is a lessor of evils. You shouldn't be investing in individual stocks, but a stop loss helps protect you from yourself. If you are a losing poker player, playing small in relation to your bankroll won't necessarily help you win, but it sure will help you play longer.
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#14
10-28-2005, 02:04 PM
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Re: Just bought my 1st 2 stocks
if you don't set stops you shouldn't be in the mkt....PERIOD!
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#16
10-28-2005, 02:46 PM
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Re: Just bought my 1st 2 stocks
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#17
10-28-2005, 04:29 PM
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Re: Just bought my 1st 2 stocks
[ QUOTE ]
if you don't set stops you shouldn't be in the mkt....PERIOD! [/ QUOTE ] Hmm, I've never set a stop, and never had a losing year. So I guess absolutes don't always apply, do they.
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#18
10-28-2005, 04:31 PM
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Re: Just bought my 1st 2 stocks
[ QUOTE ]
[ QUOTE ] if you don't set stops you shouldn't be in the mkt....PERIOD! [/ QUOTE ] Hmm, I've never set a stop, and never had a losing year. So I guess absolutes don't always apply, do they. [/ QUOTE ] Actually I'm not the best example, Warren Buffett is. He never uses stops. I guess you are saying he shouldn't be in the market?
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#19
10-29-2005, 07:37 PM
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Re: Just bought my 1st 2 stocks
[ QUOTE ]
stock is just a piece of paper [/ QUOTE ] I can buy paper for $3 a ream at Office Depot. Why would I pay $50 for one sheet that already has writing on it?
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#20
10-29-2005, 11:55 PM
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Re: Just bought my 1st 2 stocks
[ QUOTE ]
[ QUOTE ] stock is just a piece of paper [/ QUOTE ] I can buy paper for $3 a ream at Office Depot. Why would I pay $50 for one sheet that already has writing on it? [/ QUOTE ] Real estate, you own a piece of paper that says you're the owner if a brick an mortar house. Stocks, you own a piece of paper that says you're the owner of a brick and mortar house with machinery inside wich produces goods/value. I prefer the 2nd piece of paper. Also, I bet a blue chip stock like procter and gamble or GE has more intrisic value than almost any piece of real estate, and also less risk. What I'm saying is, you can use stop losses in anything in life, if you realy believe in it.. so why just stocks?
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