Galt Stock

Independent Investment Research for IRA’s and 401K’s

Dec 2, 2008

The roller coaster ride that never ends.  The market is acting like a schizophrenic teenager.  When you decided to invest in the stock market, did you know that buy and hold was a lie, told by stockbrokers to make it all seem so simple?  I use a 20% trailing stop loss on all long-term holdings.  This combined with asset allocation of no more than 5% of total investable funds in any equity limits my loss on any one stock to 1% of total portfolio.  This discipline will let you sleep better at night.  I suggest you look at your portfolio and review the benefits this program would have saved you.  If you are like most investors, you are sitting on large losses in some, if not most of your positions.  True, it is not a loss unless you sell the stock, but if you are in love with a particular company, you can always buy it back at a cheaper price.  I never buy back a company that I have been stopped out of for at least six months.  This helps me avoid blindly buying “because it’s a good company”.  After six months, your analysis can be objective.  By selling when a stock closes 20% lower than its highest closing price, you will also protect a lot of the profit gained by past stock price increases. 

I have been working on a new web site, which should be ready to launch in a few days.  I encourage you to think about the sell discipline described above.  It is difficult to do; no one likes to sell a stock “you just know is going to go back up”.  Investing needs to be a cold-blooded business.  You have to survive to fight the next day! 

WARNING:    The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it’s your money.  If you lose it, it’s your responsibility, not ours or your grandmothers!  The editor may or u amay not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future

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