Investing stop loss orders

on a 401K

[walkman]

I have a huge chunk of money in one stock. I know the risks of having too many eggs in one basket, but I have faith in this stock: it'd old economy, profitable, enough back orders for a few years, and the sector been doing very well. So far, I am up 30% thsi year, but my fear is that something happens and I lose a lot while I'm on a vacation, or out of the country.

what do you guys think of stop-loss orders? Do you use them? This is just a general question, and I know to do my own research first. If I screw up, I am to blame ;)

[DamonHD]

Hi,

I'm a man whose made most of his money from financial derivatives for more than a decade, and a stop-loss is effectively in that ball-park since you pay for the right (it's a floor trade), but I still think you should put only what you can afford to lose in any one stock and spread the rest around.

I am most definitely not qualified to advise, and not allowed to either; I'm simply repeating the industry mantra. But it is good nonetheless.

Rgds

Damon

[Essex_boy]

Be very cautious, I used to trade on a margin while a student did blindingly well. Bought stock in a firm that I suspected was doing well, it was.

Profits were annouced at a new high, dumb ass chairman then states well thats about it folks from here on in its down here.

Just like the share price. Lost a fortune, in 20 minutes.

Point, take the profit there are many things beyond your control.

[walkman]

Essex_boy,
thanks for the advice. I actually sold about 75% of my stock from that company and bought 3-4 other ones. I can always jump back in there and buy again if needed. I am taking a chance with the new buys too, but in smaller amounts and I plan to get out once I reach a 20-30% gain...or loss on them.

Changed my view on buy and hold / loyalty too, at least until I have Warren Buffet money (just $35 or so billion away :)) He is reported to have said that he would guarantee a 50% increase each year--provided he only had to invest $1 million.

[akmac]

sorry- accidentally posted something absolutely without substance...

I'd be very happy with 50% returns-I wonder what percentage of investors are making that?

[walkman]

>> I'd be very happy with 50% returns-I wonder what percentage of investors are making that?

very few I bet as it is hard. According to a "Future Value Calculator," $1 mil right would be worth over $52 Million in just ten years (coupounded yearly) . Even $50K would be worth over $2.6 mil in that ime (no taxes taken out though)

[mcavic]

I wonder what percentage of investors are making that?

I have a few stocks that are up over 90% in about a year. The problem is that the average investor is also holding some losing stocks, and that tends to even it out. I'm running at about 20% annualized this year, and my goal is 30-35%, which I realize is pretty high.

As for the original question, I tend not to use a stop loss, because I don't like getting out too soon. But then, I hold many stocks, so a few of them can tank and it won't be a total disaster.