stop losses

The biggest problem with the stop-loss strategy is that, in essence, it ensures that you're buying high and selling low. After the stock falls, all else being equal, it should be a more attractive investment, because it's cheaper now than it was before. So, you really ought to be buying. Instead, you're saying "I'll just ignore my analysis and logic, and throw that stock out the window, because the market is smarter than I am." Buy some self-confidence, dude!

Buffett's way
Warren Buffett takes a radically different approach to avoiding losses by building a crash-resistant portfolio. He simply buys stocks that are undervalued and avoids those that are overpriced. The theory is that stocks tend to return to their fair value over the long term. So, if you're buying the stock below its fair value, it's more likely to go up than down. And if it falls, the stock's simply getting more and more undervalued. Thus, a portfolio of cheap stocks tends to be crash-resistant.

Stop losses are probably most appropriate for traders. For long-term investors, it makes more sense to focus on understanding the stocks you own, and only buying stocks for less than their fair value.