What to do when your share hits -10%?

grey_gym_sock

gkerr4 wrote: »

what??? I despair? - do people really buy shares and then not "track" them?

every day - every day you should know what your portfolio performance is and why - was it the market sentiment? was it a profits warning? - spend time and research your shares - not just before you buy them but all the time! - this is investing - its your money. Thats my final posting on this - i can't believe it - perhaps this should be the "moneyloserexpert" forum.

i think you're talking about trading, as opposed to investing. they are different strategies.

in investing, the main approach is to be in the market for as long as possible. if you can pick better shares than average, or buy and sell with better timing than average, that is no more than a bonus.

"benign neglect" of a portfolio can work for much of the time. though if the neglect is too great, there is a case for using passive investments.

bowlhead99

gkerr4 wrote: »

this is just unbelievable poor advice - sorry.

yes - you will lose on probably around half (maybe more) of the trades you enter - so cut them at 10% and let the winners run and look to take 20-30+% on the winners - overall you are up.

Look at the AIM all share index below - it represents share price movements (not total return including dividends, just the price) of a basket of all the AIM shares you could buy. Look how volatile it is.

A 10% movement in the index within the last 10 years is 50-120 points and happens all the time. And this is on the entire diversified basket of 700+ shares all averaged out. Any one individual share you can buy is hugely more volatile than this. If you have a stop at -10% you will lose on very many more than half of your trades.


You are seriously saying that if one of those shares dares to fall 10% you should immediately and automatically sell it, in case it never recovers its original value?

What you would achieve with your 'strategy' is to buy high sell low on 90 out of 100 deals, losing say 90 x 10% x £1000 , and then cut your winners (the few ones which are able to advance 25% before falling 10%) giving 10 x 25% x £1000. Overall you win £2500 and lose £9000. Well done.

I agree you should take an interest in why your share prices are moving and have trigger points to re-evaluate. But lets say in a given week the market is down 3%. On average your portfolio is in line with this movement, but one of your stocks falls from 40p to 36p. There is no announcement or overt press speculation. How much cash should you spend on professional subscriptions to cover all news sources and how many hours must you spend online that day to exhaustively re-research the market and geographical sector in order to satisfy gkerr4 that you are justified in NOT selling the shares that day, in absence of specific negative news?

I suspect this is an argument that can't be won. But if you are an investor rather than a trader/speculator, feel free to take a long term view, it will be less stressful and quite possibly much more lucrative.