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All day I listened to the talk show hosts in discussions with people who didn’t know any better than to sell at the bottom. They couldn’t handle the worst week in the history of the Dow … on a percentage basis no less … they CRACKED and sold.

Remember the saying, “Buy Low, Sell High” … how about the other one, “Don’t try to catch a Falling Knife”.

Unfortunately the “Common Man/Woman” is caught in a bit of a trap at times like these. It is the institutional investors, moving blocks of thousands of shares at a time that get caught up in the stampeding herd of sheep we have seen on the street this week. The panic spreads and everyone sells because they think everyone else is selling.

Avoiding these huge losses can be deceptively simple.

How do you limit your losses in any stock transaction?

The simple and time honored tool of the Stop Loss Order.

The Stop Loss automatically gets you out of a hyper liquid investment like Stocks, Bonds, Mutual Funds and ETF’s and limits your loss to whatever percentage or dollar point you choose. But … here’s the key…

As your stocks move up in a rising market, move your stop losses up behind the latest price. That way you will lock in your gains and get “kicked out of the pool” on a large loss.

Remember too … there is never a Bad Time to Take a Profit !!

If you have a stock in the black and you are nervous at all … sell and lock in your gain. You can always get back in again (with a stop loss order to protect you) if it keeps going up.

These are some risk mitigation steps for highly liquid investments that would have saved a LOT of people a ton of their hard earned retirement funds in the last couple of months.

As for me … I have some cash socked away and am thinking this highly likely to be a GREAT time to buy some quality, solid, large company stocks … like big oil … at a discount we might never see again. And it will soon be an excellent time to buy distressed Multifamily in Texas

In the meantime my Commercial Properties keep chugging along.

To your investing success…

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