JPMorgan Natural Resources -48% down but still hanging on

Malthusian

Jo_Blogs wrote: »

Has anyone mentioned factoring a stop loss strategy to fund performance?
It is perhaps something that needs some thought when investing in funds within a portfolio.

I set mine @ 10% - Just a thought :-)

A fund like this would be expected to fall by 10%, frequently. What are you going to do with the money when the stop loss activates and you have 90% of your investment sitting in cash?

If you don't know or the answer is "leave it in cash" you are almost guaranteeing yourself a loss of 10% over an unknown timeframe.

If your plan is to buy back in once it falls by 20% or 30%, what if it never does - if there's a blip of -11% and then it recovers and keeps on climbing? At what point do you cut your losses and buy back in at a higher price than you sold it for?

Stop losses are a great way to violate Warren Buffet's rule no. 1 - "don't lose money".

Linton

Jo_Blogs wrote: »

Has anyone mentioned factoring a stop loss strategy to fund performance?
It is perhaps something that needs some thought when investing in funds within a portfolio.
I set mine @ 10% - Just a thought :-)

Stop losses make some sense if you are investing in individual shares because there is the possibility that the company may go bust losing you everything. The chance of a mainstream fund going bust or even to a permanently low value is more or less zero. So there isnt the same justification for a stop loss. Whatever the current value of a fund is, at some point in time it will be exceeded. If you didnt believe that to be the case you shouldnt invest in the fund. So I dont see any justification for stop losses for funds.

If you believed a fund was investing in at the price you bought surely, unless the world has changed drastically in the meantime, a fall in value is an indication you should buy some more rather than sell the units you have.

gadgetmind

Malthusian wrote: »

A fund like this would be expected to fall by 10%, frequently. What are you going to do with the money when the stop loss activates and you have 90% of your investment sitting in cash?

Well, quite. Imagine buying a house and then straight away telling the estate agent to put it back on the market for 90% of what you paid and take the first offer.

sabretoothtigger

If its an active fund so management is already selling and taking profits hopefully ?

I took - BGF World Mining D4RF GBP
BlackRock Global Funds - World Mining Fund D4RF GBP (GBP)

Because its discounted to its own assets and those are companies reasonable to hold in a portfolio I think