how to deal between stop loss and long term investment
- Thread starter mandal
- Start date
friends,
most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.
most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.
Stop loss is for traders, who have limited capital and their revenue is generated using that capital.
Hence stop loss is necessary for a trader as he is out of business if his capital is wiped out.
Investing, that too for long term, should be interpreted as follows:
If some portion of your money you can forget for 2-3 or even 5 years(in other words you will not be needing it),
then you put it in some such asset class where it will give you more returns than minimum bank returns which is near 10%.
Hence stops are subjective in investment scenario.
Hope its clear to you, if any queries please feel free to ask.
In my view, even long term investors also need to know when to cut the loss and book profit or loss (whatever it is).
If you want to see real long term, then look at 30 yrs chart of nikkei. It has not touched the highs of Jan-1990 so far.. infact, it is currently trading at 1984 levels i.e. 30 yrs old level. i.e. if some long term investor of of Nikkei is retiring today then he would be seeing his investment what he had when he started at the beginning of his job..
Highs made in US market during Jan-2000 were touched again in oct 2007..and it is still trading below those levels after 12 years.
Latest bull story of China.. Its 2008 highs are still far far away. Market is trading almost half of that level today (6k to 3k range now). i.e. it will need 100% of growth from here to just reach the level made earlier.
Luckily our story is different as we are still in growth phase.. But if histroy of investment, business cycle, fear and greed, social and demographic dynamics are to be believed than some day we also will be in that phase (maybe by 2030/2040/2050 or so).
So better to learn the latest rules of investing in 21st century (which is active investing), and not stick to 19th and 20th century rules of buy and hold.
Do you remember the companies like Indal, SCICI, P&G, Thermax, Andhra Valley, Reckitt Colman, Satyam etc.. Once upon a time, they were part of nifty index and today most likely we might not know their performance. The stories of many stocks that were darling of some bull run (harshad mehta stocks, ketan parekh stock, Mutual fund darling stocks, FII darling stocks, ADAG group stocks etc..) even lot more horrible.
So dear, it is time to wake up to active investing.. and facing the reality. Not waiting for your retirement days to figure it out when it is too late..
I was also great fan of Buy &Hold , Buffet style, long term investing till dot com crash. But changed the kemp now. Even for my pension portoflio, I follow some type of stoploss.. by the way, I have been stopped out from stocks around 6000 level. But still invested in Gold / silver/ Agriculture / oil etc.
Happy active investing
If you want to see real long term, then look at 30 yrs chart of nikkei. It has not touched the highs of Jan-1990 so far.. infact, it is currently trading at 1984 levels i.e. 30 yrs old level. i.e. if some long term investor of of Nikkei is retiring today then he would be seeing his investment what he had when he started at the beginning of his job..
Highs made in US market during Jan-2000 were touched again in oct 2007..and it is still trading below those levels after 12 years.
Latest bull story of China.. Its 2008 highs are still far far away. Market is trading almost half of that level today (6k to 3k range now). i.e. it will need 100% of growth from here to just reach the level made earlier.
Luckily our story is different as we are still in growth phase.. But if histroy of investment, business cycle, fear and greed, social and demographic dynamics are to be believed than some day we also will be in that phase (maybe by 2030/2040/2050 or so).
So better to learn the latest rules of investing in 21st century (which is active investing), and not stick to 19th and 20th century rules of buy and hold.
Do you remember the companies like Indal, SCICI, P&G, Thermax, Andhra Valley, Reckitt Colman, Satyam etc.. Once upon a time, they were part of nifty index and today most likely we might not know their performance. The stories of many stocks that were darling of some bull run (harshad mehta stocks, ketan parekh stock, Mutual fund darling stocks, FII darling stocks, ADAG group stocks etc..) even lot more horrible.
So dear, it is time to wake up to active investing.. and facing the reality. Not waiting for your retirement days to figure it out when it is too late..
I was also great fan of Buy &Hold , Buffet style, long term investing till dot com crash. But changed the kemp now. Even for my pension portoflio, I follow some type of stoploss.. by the way, I have been stopped out from stocks around 6000 level. But still invested in Gold / silver/ Agriculture / oil etc.
Happy active investing
friends,
most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.
most of the time i came to listen that follow strict stop loss, and invest for long term .
If i invest for long term what to do about stop loss.
Thats what mutual funds do..they keep buying..they are always long.
This is the reason all MFs gave negative returns during Jan 2008- march 2009 bearish run while John Paulson made a neat $ 1 billion by shorting mortgage securities.
You see long and short are two very important dynamics of market. The securities in which are you investing for long term, traders are raping those securities in the current series by going long or short. As an investor, you are providing liquidity for traders to rape it smoothly.
The best way to invest for long term is SIP. There is no better way to invest money because you clearly rule out timing of market in SIP investments.
As a SIP investor, the guys got some units/shares in March 2009 at the bottom of the market. What a beauty !
AW10,
I guess we don't have to wait for 2030 etc.. Though the index almost touched its 2008 high in oct 2010, many stocks( almost 70%) were well below the highs of 2008.
So, stocks in Telecom, infra, construction ,almost every sector except IT and Banking are down and out.
May be we are already in that phase , mentioned above.
I guess we don't have to wait for 2030 etc.. Though the index almost touched its 2008 high in oct 2010, many stocks( almost 70%) were well below the highs of 2008.
So, stocks in Telecom, infra, construction ,almost every sector except IT and Banking are down and out.
May be we are already in that phase , mentioned above.
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