Quote:
Originally Posted by Hog's Gone Fishin
I used stop loss orders today and it looks like it saved me about 3k of losses based on where those stocks closed. Now I get a chance to rebalance at better prices.
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All fair and true and stops are a sound method of risk management. But just because you saved that 3k doesn't mean you have to become re-invested again immediately because it went down further.
There are two schools of thought. One is that if you liked the market at X, the market at 95% of X is a real bargain. The counter to that is if you liked the market at X and it's now at 95% of X, something in your original thesis was entirely incorrect.
When you're invested in something, you are naturally going to be less honest about it than if you were a dispassionate outside observer. You stopped on some positions and now have the ability to view things more objectively. That is a huge advantage in a market that's been driven by euphoric sentiment.