I’ve have that and it is down 81% right now since I bought it.
Well people like me, much more trader than investor but able to put on the investor hat never ever ever ever ever allow something to fall 10% under our cost (and the real number is 7-8%)....with the exception of some options, and sometimes, even more than sometimes, those go to zero.
The twin reasons: First is the math. We know that it takes a 100% gain to make up for a 50% loss. It takes a 33% gain to make up for a 25% loss. It takes a 67% gain to make up for a 40% loss. However it only takes an 11% gain to make for a 10% loss. This is immutable math. But we are not, supposedly, in the market to break even. You will read that philosophy in IBD as well.
Second reason: the key to investing is to avoid big losses. That is Buffett’s #1, #2, and #3 rules, if you think I am being too “tradey” for you. Almost everything else takes care of itself. If you never allow more than a single digit loss, it never takes more than a single digit gain to make it up. Again, this is inarguable, immutable math.
People have been saying “rates can’t go lower” for 3+ years and they have been obliterated.
When you listen to “what people say” you’ll be wrong massively more than right.
You can buy TBT here @ 35.6 and place a 50-cent stop loss on it, 1.5%, which is a reasonably big fat move. TLT, its opposite, is +1.07 here (biggish but not enormous) and TBT is down .63 And you can do that SIX TIMES before you reach a 10% loss.
When I take a small loss on a trade, sometimes those are absolutely my best trades. It means I recognize I was wrong, I recognized it early, I did not fall in love, I did not go to stubborn, and I stopped it from whacking me.
Next time. Me: every time.