Does Weekly Stocktip have a stop-loss system?

Weekly stocktip doesn't provide or recommend setting a static stop-loss value.

The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are their for his convenience, either to be take advantage of or to be ignored. He should never buy a stock because it has gone up or sell one because it has gone down. - Benjamin Graham

Our strategy dynamically tries to figure out the best time to sell a stock based on financials. It is much better at managing and evaluating risk than any hard-coded stop-loss system we have tried.

Human investors have to deal with emotions, the easiest way to try and control those emotions is by following a static stop-loss. E.g. -10% (if that gets hit, no matter what you sell it). However algorithms don't have to worry about emotions at all, instead it analyzes the risk to figure out if it statistically makes sense to keep holding onto the stock, or sell off and take the loss.

Let's say a stock price drops 20% in value in a single day, because of speculations that something will happen, or a scandal about the CEO or they lost a partner etc. etc. Sometimes these events have absolutely nothing to do with the future profitability of the company or its financial situation. The stock might very well drop in price, but if it's still a financially sound investment with a very high probability of future outperformance. The system will hold it.

The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons’ mistakes of judgement. - Benjamin Graham

It happens quite often that a stock drops in value due to news, investors get fearful and exit out in an over-reaction causing it to drop even further. Followed by investors realizing how cheap the stock just got and buy it up like crazy until it quickly jumps back to above the previous highs. Any hard-coded stop-loss system would fail in this scenario.

Human investors

The #1 priority of our strategy it evaluation risk vs reward based on finances, not news. It is a big factor in our success, and it is almost certain that some of our stock picks will drop significantly in value at some point.

We strongly recommend to follow the SELL signals.
Was this article helpful?
Cancel
Thank you!