Investing Without Trailing Stops: Here’s Why 75% of Stocks Are a Sucker’s Bet

by Alexander Green, Advisory Panelist

A couple weeks ago, I explained why it is imperative to run trailing stops behind your individual stocks.

Sell stops ensure that your capital is protected and your profits don’t slip through your fingers.

However, one subscriber took me to task, saying that a trailing stop guarantees you won’t “sell at the top.”

Quite true.

However, “selling at the top” and its corollary, “buying at the bottom,” are not realistic investment goals. Here’s why…

The Danger of Selling High and Buying Low

For one thing, you never know the top or the bottom until you’re looking in the rear view mirror. And given enough time, all-time highs and lows are usually exceeded.

For example, you may sell a stock at its 52-week high – not a good

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French car manufacturer Renault says that it supports the changes in management at Avtovaz, which should solder the links between the car manufacturer and Russian Technologies.  Igor Komarov has replaced Boris Alyoshin as the company President.  Telenor is making a second appeal against the fine imposed on it for not voluntarily paying a $1.7 billion fine in damages to Vimpelcom.  ITAR-TASS informs us that Russian citizens owe more than 150 billion rubles to banks.  The poverty rate has reached 17.4% in the first quarter, or a total of 24.5 million people.  Whilst statistics have shown soaring profits for retailers such as Magnit and X5, the Moscow Times suggests that overoptimism may be misplaced.  'Mind boggling' is how an op-ed contributor in the Moscow Times describes Russia's plan to buy a $1 billion French Mistral, ...

Oleg Deripaska will not be settling a $2.4 billion lawsuit brought against him in Russia, as he had hoped, but in London.  During his trip to Lake Baikal, Prime Minister Putin said it was not entirely impossible that the paper and pulp mill there owned by Deripaska, which closed in October, may begin operating again, as it does not harm the environment.  Workers from car manufacturer Avtovaz will protest against the firm's decision to cease production for August.  'Russia's failure to build a quality car is... astounding,' says Alexei Bayer in the Moscow Times.  Hermitage hedge fund will take its fraud case against Renaissance Capital Holdings to the US in search of evidence.  Mobile TeleSystems will buy 51% of Comstar United TeleSystems for $1.28 billion.  An op-ed piece in the Moscow Times suggests that ...

Magna is pulling out the stops in its bid for Opel by increasing the amount of upfront capital it would pump into the company to €350 million, following criticisms from the German government about the size of cash injections offered by bidders.  Sberbank says it expects a verdict on the bid this week.  Beer manufacturers have pleaded with Putin to rethink a plan to triple beer tax saying it would precipitate the 'destruction of the industry'.  Avtovaz's output this year will be 59% less than that of last year.  The New York Times reports that the car manufacturer is contemplating making 27,000 employees redundant to slash costs, reports which the company has denied.   In a move to protect domestic car production, the Industry and Trade Ministry has suggested postponing the introduction of the Euro-4 fuel ...

Rosnano hopes to use President Obama's visit to urge him to introduce tax breaks for Russian companies, and conclude talks to establish a $1 billion venture fund with US companies to invest in Russia.  The number of unemployed could hit 18% by the end of the year casting serious aspersions on the government's anti-crisis plan.  Cherkizovsky Market may re-open by the end of the week, following a thorough cleaning.  Job cuts yesterday; today Oleg Deripaska's troubled GAZ group says that it may shut down several unprofitable units because of the economic climate.  Presidential aide Arkady Dvorkovich has said that all methods should be used to increase demand for housing.  Local pork producers are facing competition from importers of live pigs who use a customs loophole to dodge quotas and tariffs.  The Washington Post reports on ...

Putin has revisited the proposal of a new unified property tax, which would reduce the price of costly real estate and bolster local government budgets during the crisis.  The ruble has risen to a three-month high against the dollar as oil reached over $50 a barrel.   The budget deficit has swallowed up some of Russia's oil wealth funds, which lost $13 billion in value in April.   Car manufacturer GAZ will take part in a joint bid for GM's European plants with Ontario-based car parts giant Magna.  General Motors has come to an agreement with four Russian banks to offer consumer loans for its cars at lower interest rates.  Russian Railways, Russia's biggest employer, will seek an extra $910 million in state aid as this year's losses could reach twice the amount predicted.  Vladimir Potanin has ...

Barring some dramatic – and unforeseen – news this week, expect investors to tread water until Thursday, when the government is expected to release the results of the bank stress tests it conducted on the 19 largest U.S. banks.

The stress-test results are expected to show that the 19 banks may have to raise between $100 billion to $150 billion – or even more – in new capital. Investors will cause the shares of the strong players to zoom northward, and will likely savage the shares of the weakest players.

“I can’t think of a time since I’ve been watching banks when there’s been so much uncertainty about the true value of a key set of assets,” Douglas Elliott, a fellow at the Brookings Institution, a Washington think tank, told Reuters.

The U.S. bank stress tests have transfixed the world financial markets for weeks, exacerbating the ongoing financial crisis – worsening the U.S.

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