The art of cutting your losses

[Schrodinger]

http://www.thebull.com.au/premium/a/40373-the-art-of-cutting-your-losses.html

Good read. I find the point about selling as soon as you hear bad news interesting.

I would have to disagree with this as a value investor. Assuming this event will not impact the company overt the long term it could actual signal a buying opportunity ratheer than a selling one.

[Schrodinger]

very interesting article that all investors shpuld read before investing. as humans, we are very much fallible; learning when to take losses stops mistakes being compounded. i, for some unexplicable reason, have been very good at selling my stocks before losses ensue. I guess when the writing is on the wall and you watch the market enough and see the rhythms you can make such decisions easily. I am also an eternal optimist and see money to be made everywhere, even if the stock is going down fast!

As everyone knows all stocks have their ups and downs. If you read Intelligent Investor on page 222 they talk about how value investors look at the market (news flash example).

Can you time the market?... very difficult, so some of your stocks will go below purchase price on occasions. It is only a loss if you sell and if the story hasnt changed there is no need to sell, at least from a value investors point of view. In fact this to me is a signal to buy more.

This is one of the reasons why short term investing is difficult.