Comments on: Why It’s Better to Cut Your Losses Early http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/ Personal Finance. Investing. Wealth Building. Fri, 19 Mar 2010 17:05:21 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Make Friends, Earn Money http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-10541 Make Friends, Earn Money Sun, 18 May 2008 10:36:24 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-10541 Risk assessment in financial markets is always a tricky venture, I like the way you've broken this down as invariably it is usually better to cut your losses early. Risk assessment in financial markets is always a tricky venture, I like the way you’ve broken this down as invariably it is usually better to cut your losses early.

]]> By: frank http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-5894 frank Thu, 21 Feb 2008 16:42:51 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-5894 Ahh I got it. That's a good point. I see that I'm still relating to the high position, the $1k by your example, and not the new position. That's what I have to work from at that point, this is good, luv learning stuff like this, thanks Pinyo. Ahh I got it. That’s a good point. I see that I’m still relating to the high position, the $1k by your example, and not the new position. That’s what I have to work from at that point, this is good, luv learning stuff like this, thanks Pinyo.

]]> By: Pinyo http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-5893 Pinyo Thu, 21 Feb 2008 16:34:38 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-5893 Frank - welcome to Moolanomy. There is no additional cost per se. The point of the table is that many new investors mistakenly believe that 50% loss can be recouped by 50% gain, when in fact that's not true. If your $1,000 position lost 50%, then it's currently at $500. A gain of 50% on $500 will bring it up to only $750, not $1,000. I hope that's clear. Frank – welcome to Moolanomy. There is no additional cost per se. The point of the table is that many new investors mistakenly believe that 50% loss can be recouped by 50% gain, when in fact that’s not true.

If your $1,000 position lost 50%, then it’s currently at $500. A gain of 50% on $500 will bring it up to only $750, not $1,000.

I hope that’s clear.

]]> By: frank http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-5892 frank Thu, 21 Feb 2008 16:29:01 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-5892 That table is great but I don't understand what's behind the numbers. What is causing the additional amount needed to breakeven? If I'm holding onto a stock that dropped 50%, where is the additional cost? That table is great but I don’t understand what’s behind the numbers. What is causing the additional amount needed to breakeven? If I’m holding onto a stock that dropped 50%, where is the additional cost?

]]> By: Make Friends, Earn Money http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-5063 Make Friends, Earn Money Wed, 30 Jan 2008 14:27:22 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-5063 my personal view is that it depends on the level of risk you are willing to expose yourself to. I personally see stocks and shares as a medium to long term investment and traditionally stock markets always follow an upward trend if you are willing to hang in their long enough. I think that as you get older it is probably worth reducing your exposure and investing in government bonds, but as i'm still in my early thirties i'm happy at ride out the tough times, however tempting it is to sell. Interesting post though. my personal view is that it depends on the level of risk you are willing to expose yourself to. I personally see stocks and shares as a medium to long term investment and traditionally stock markets always follow an upward trend if you are willing to hang in their long enough. I think that as you get older it is probably worth reducing your exposure and investing in government bonds, but as i’m still in my early thirties i’m happy at ride out the tough times, however tempting it is to sell. Interesting post though.

]]> By: Pinyo http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-1525 Pinyo Wed, 31 Oct 2007 03:16:43 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-1525 Mark - I think it all depends on the particular stock. You will have to do a due diligence and see what level of loss you are comfortable with. As you can see from the chart, I think it make sense to cut it at around 20% loss. Mark – I think it all depends on the particular stock. You will have to do a due diligence and see what level of loss you are comfortable with. As you can see from the chart, I think it make sense to cut it at around 20% loss.

]]> By: Mark http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-1520 Mark Wed, 31 Oct 2007 00:36:43 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-1520 How would I be able to apply this towards dividend paying stocks (I have a few that are DRIPS) ? How would I be able to apply this towards dividend paying stocks (I have a few that are DRIPS) ?

]]> By: Weekly Web Favorites » Finance and Fat http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-1275 Weekly Web Favorites » Finance and Fat Sun, 21 Oct 2007 14:25:57 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-1275 [...] Cut those losses! @ Moolanomy Great little chart that shows how much your investment would have to gain in order to break even after it goes down. I couldn’t agree more and I almost always put in a 20% stop-loss order when I buy individual stocks. Of course, you can always decide to hold on through a decline because you are right and the Street is wrong, but hopefully looking at this chart will help you to get out quickly. [...] [...] Cut those losses! @ Moolanomy Great little chart that shows how much your investment would have to gain in order to break even after it goes down. I couldn’t agree more and I almost always put in a 20% stop-loss order when I buy individual stocks. Of course, you can always decide to hold on through a decline because you are right and the Street is wrong, but hopefully looking at this chart will help you to get out quickly. [...]

]]> By: Pinyo http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-1248 Pinyo Fri, 19 Oct 2007 23:53:46 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-1248 @John - Thanks. I will look it up. @Money Blue Book - That's another way to look at it. @Mrs. Micah - Index is a good start, but to achieve even better result try asset allocation with different types of index funds (or better yet ETFs) and rebalance at least once a year. @John – Thanks. I will look it up.

@Money Blue Book – That’s another way to look at it.

@Mrs. Micah – Index is a good start, but to achieve even better result try asset allocation with different types of index funds (or better yet ETFs) and rebalance at least once a year.

]]> By: Mrs. Micah http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/comment-page-1/#comment-1246 Mrs. Micah Fri, 19 Oct 2007 19:28:33 +0000 http://www.moolanomy.com/255/why-its-better-to-cut-your-losses-early/#comment-1246 It's hard not to hope that it'll at least get a bit better, or that the slump is the dark before the storm. Hence why I plan to stick with such investments as Vanguard's S&P 500 index. It’s hard not to hope that it’ll at least get a bit better, or that the slump is the dark before the storm. Hence why I plan to stick with such investments as Vanguard’s S&P 500 index.

]]>