for example, I remember buying into Finish Line a while back (when they made the stupid offer to buy up another retailer)… the shares plummeted from my initial purchase- well over 60%. However, I held out, and eventually sold my position at a hefty gain. Point being, selling stocks, due to an arbitrary loss figure, will only increase your transaction costs, and lessen your chances of holding on to a great winner (provided that you have done your research)

All I am getting at, is that in times like these, a few percentage points that are shaved off the share price of a security are pretty meaningless; look at the price volatility in SNS!

jeff’s last blog post..Book Review of Distress Investing: Principles and Technique

If it works for you then thats what is important. My comment about arbitrary trigger points is my personal opinion and thinking for your self is IMO the most important part of any investment strategy.

@Jacob

Good point. My personal feeling is that you hold/buy when the stock is undervalued and sell when its at value or overvalued. So if there is alot of hype around a stock and it goes above what you believe the intrinsic value to be then definitely sell. However just because a bargain stock goes up %50 it may still be undervalued. If it is I would usually hold the position and wait however long it takes to for the value to be reflected in the price. Of course this assumes regular analysis to make sure the value is still there.

But if you are attempting to trade on movement and not based on a margin of safety then it is probably better to have rules like “sell when it reaches %50″ because you only barometer is the stock price.

Thanks all for a great discussion.

Ken’s last blog post..Wesco Financial Annual Meeting Notes

My percentages are arbitrary but they work for me.

After re-evaluating my analysis I usually increase my position as this is usually en even better price to be getting the investment at.

I have also learned not to invest a too high a percentage in one name.

All investments are bets with a certain probability of paying off. What I am trying to do is to limit my losses on bets that are not paying off.

Tim’s last blog post..9% Euro return from a utility like business

I agree with his methodology about arbitrarily having percentages of when to buy more and sell more but only when he does an analysis of the recent events that caused the business to fluctuate in price.

Just my two cents…

@ Ken
Good points about Mr Market. All too often, many investors sell once their stock takes a huge drop thinking that something is wrong when it is really just Mr Market playing up.

Like yourself, if I buy a dollar for 50c and then Mr Market offers it again for 25c, I’m a buyer of course. Will try to get there first in line but I too find myself missing out sometimes over analyzing the situation.

If something was a already a good bargain at X and the market sends it down another 25 points, you should probably be selling your more overvalued holdings to take advantage of this opportunity. Assuming you are confident in your analysis.

Ken’s last blog post..Wesco Financial Annual Meeting Notes

Not exactly a genius strategy.