From: Olga Bourlin (fauxever@sprynet.com)
Date: Sun Jun 15 2003 - 20:48:23 MDT
From: "gts" <gts_2000@yahoo.com>
> Dossy wrote:
>
> > On 2003.06.15, Olga Bourlin <fauxever@sprynet.com> wrote:
> >> Use those stops, people.
> >
> > Use them in both directions, if you're not able to constantly monitor
> > your portfolio.
>
> Stops are an absolute waste of money. In the long run they only make money
> for the brokers.
So, you advice to me would have been not to use a stop to get out of CREE
Friday, so that rather than losing @$50 on my 300 shares, I should have held
on to CREE and lost $1,233 by the end of the day (and who knows what Monday
may bring)?
> They are valuable to investors only if stock prices trend, but countless
> studies show that stock prices do not trend. Price trends are an illusion.
All right. The stock market is an illusion. The bear market is an
illusion. Price trends are an illusion. Be that as it may, I say stops are
valuable if the stock tanks on bad news (as did CREE) or if you're short and
the stocks keeps going up (e.g., on AMZN and it just kept going and going
and going - up - like the Energizer bunny for no apparent reason one can
fathom ... ha, I've been there!) Losing money, however, is NO illusion
(and, fortunately, making money is no illusion either).
Olga
> Those who don't believe me can try a simple experiment: set up a
spreadsheet
> to compute a random daily high, low and close on an imaginary stock. This
> can be done quite easily if you know how to use Excel or any other
> reasonably advanced spreadsheet program. Compute the cumulative data for,
> say, 500 days. Plot those 500 days of data on a chart.
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