Question for the Old Timers on Stop Losses

[Anonymous]

For those who have seen multiple market drops, have you managed to curb your losses using stop losses during those times? How effective were they? I see a lot of people talking about moving to cash or bonds but wouldn't they be better off investing in VOO or QQQM with an 8-10% trailing stop loss?

I've done trailing stops for individual stocks and some have worked to stop the loss but in a couple of cases, the stops were hit and the stock went right back up..

[Anonymous]

Nope. We have just held steady.

[Anonymous]

I don't have the energy to play games with stocks. I buy to hold. The only guy I know who actively messed around ended up losing his family's money, divorced, with a stint in a psychiatric institution. Not good.

[Anonymous]

The people I know that talk about trading stocks all seem to have gambling telated tendencies. All focused on a quick buck. Puts/calls. Robinhood app focus with its gamification.

[Anonymous]

Don't lose if I don't sell. Haven't lost in a very long time. I concentrate on buying more when it goes down.
The prices move so fast. Within weeks it's back up and ready to go. If any, I'm pissed for not buying the dip.

[Anonymous]

I would not use a stop loss to protect my investments. We had a flash crash a few years ago that triggered many stop losses on individual stocks, not sure about the ETFs, and those positions recovered their losses within minutes. I would just be diversified to manage my risk in investments.

A similar event could happen again. And the powers that be never fully explained the reasons for that event.

[Anonymous]

They are great. But remember in the Flash Crash what happened. Mid day stocks had a very brief crash. Folks got stop loss out on some stocks that closed around same price they opened at.

Puts are a better choice to avoid that.

[Anonymous]

Anonymous wrote:I would not use a stop loss to protect my investments. We had a flash crash a few years ago that triggered many stop losses on individual stocks, not sure about the ETFs, and those positions recovered their losses within minutes. I would just be diversified to manage my risk in investments.

A similar event could happen again. And the powers that be never fully explained the reasons for that event.

Who are the powers that be and what explanation might they give for the flash crash?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would not use a stop loss to protect my investments. We had a flash crash a few years ago that triggered many stop losses on individual stocks, not sure about the ETFs, and those positions recovered their losses within minutes. I would just be diversified to manage my risk in investments.

A similar event could happen again. And the powers that be never fully explained the reasons for that event.

Who are the powers that be and what explanation might they give for the flash crash?All that info is at your fingertips. My main point is that event or something similar could easily happen again. Or maybe some event happens in the Bond market, creating a rapid rise in rates, thus forcing the stock market down quickly. Triggering stop losses. Market rises on an escalator and corrects on an elevator.

[Anonymous]

OP. Thanks for all the advice folks! I'm predominantly a buy-and-hold investor that has some money on the sidelines. My question was about committing this new money. Is it better to stay on the sidelines (in bonds or MM) or invest in the market with a stop loss (8-10%)?

Best case scenario, no market crash and I participate in the market gain. Worse case, there's a crash (real or fake) and I get stopped out.. No biggie. I'm back to my money market. Am I right with this approach or am I missing something?

[Anonymous]

Anonymous wrote:I don't have the energy to play games with stocks. I buy to hold. The only guy I know who actively messed around ended up losing his family's money, divorced, with a stint in a psychiatric institution. Not good.

And if course this guy probably messaged for years about how much money he was making. It's easy to identify these guys. They're always the smartest guy in the room lol

[Anonymous]

Anonymous wrote:I don't have the energy to play games with stocks. I buy to hold. The only guy I know who actively messed around ended up losing his family's money, divorced, with a stint in a psychiatric institution. Not good.

Same. Buy and hold. Forever.

[Anonymous]

Anonymous wrote:OP. Thanks for all the advice folks! I'm predominantly a buy-and-hold investor that has some money on the sidelines. My question was about committing this new money. Is it better to stay on the sidelines (in bonds or MM) or invest in the market with a stop loss (8-10%)?

Best case scenario, no market crash and I participate in the market gain. Worse case, there's a crash (real or fake) and I get stopped out.. No biggie. I'm back to my money market. Am I right with this approach or am I missing something?

If you aren’t comfortable putting your money in the market maybe you shouldn’t put your money in the market?

[Anonymous]

Anonymous wrote:OP. Thanks for all the advice folks! I'm predominantly a buy-and-hold investor that has some money on the sidelines. My question was about committing this new money. Is it better to stay on the sidelines (in bonds or MM) or invest in the market with a stop loss (8-10%)?

Best case scenario, no market crash and I participate in the market gain. Worse case, there's a crash (real or fake) and I get stopped out.. No biggie. I'm back to my money market. Am I right with this approach or am I missing something?

The market is at all-time highs quite often, and much more than the average investor might think. What you’re basically saying is that you believe you can predict the future…so can you? The best investing advice I ever received was to simply NEVER SELL. And this is exactly the reason why:
https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would not use a stop loss to protect my investments. We had a flash crash a few years ago that triggered many stop losses on individual stocks, not sure about the ETFs, and those positions recovered their losses within minutes. I would just be diversified to manage my risk in investments.

A similar event could happen again. And the powers that be never fully explained the reasons for that event.

Who are the powers that be and what explanation might they give for the flash crash?

The 2010 flash crash, which saw the Dow Jones Industrial Average lose almost 9% of its value in minutes, was a complex event triggered by a combination of factors, including a large sell order, high-frequency trading, and market structure issues. A mutual fund's automated sale of $4.1 billion in E-mini S&P 500 futures contracts initiated the initial price drop. High-frequency traders, who trade at extremely high speeds, exacerbated the decline by rapidly buying and selling contracts, creating a "hot potato" effect.