Calm before the storm ....?, page-87

"Someone playing "hit the stop losses" and the lemmings are following, as they always do. "

Which begs the question: why on earth would one ever make use of something like a "stop-loss"?

The concept of a stock loss is, in my opinion, little more than a construct of the stockbroking industry which is intended to maximise trading volumes and, therefore, brokerage commissions [*].

To my way of thinking, someone who makes use of a stop-loss strategy is effectively saying that he/she doesn't really know what he/she is doing.

Because, if one is happy to buy/hold a share at a certain price, because one believes the business is worth more than that price, why would one then at the same time put an order in to sell that same share at a lower price?

(Of course, I can understand perfectly why stockbrokers are quite happy with that line of thinking. Stop-Losses for Investors should really be re-named "Profit Enhancers for Stockbrokers")


[*] Along with the stop-loss's cousin (but on the other side of the ledger), namely "You don't go broke making a profit".