Stop-loss or not stop-loss

[DSwissK]

I know that the price of a stock should not matter to people who "blindly" follow a Dividend Growers strategy and that a drop normally represents a buying opportunity and therefore something to be happy about.

 

However, I wanted to know if you actually put a stop-loss on the different positions in your portfolio.

 

Nowhere, always, a few (how to choose them?), how much to place it (I heard quite a few people talking about 20% below the purchase price)?

[Jerome]

Hello DSwissK

This is an interesting question. I used stops when I started out, when I was more technical analysis oriented. But after several bad experiences I abandoned this method because sales were triggered unexpectedly intra-day following a sudden drop in price, followed by an equally sudden rise. I will be told that I was perhaps setting the stops too high… certainly, but what is the limit then… if we set it at 20% I find that it is nonsense because as long as we invest in quality growing dividends a drop of 20% (is this already possible…?) should rather represent a buy signal than a sell signal. 

In short. I don't like a machine to decide for me, I prefer to keep control. And anyway I'm a buy & hold. The only reason that pushes me to sell is not the price, but the dividends. The day when the stock markets invent a stop order when a dividend remains flat for more than 4 consecutive quarters, then maybe I'll be a buyer but we are still smart enough and not lazy enough (although...) to need that...

[guyem]

Hello ,

I am starting to buy some dividend-oriented lines and ideally, we always want to position ourselves at the bottom of an ascending channel, but there are the unexpected events of more or less violent paths.... As far as I am concerned, I use a protective put at around 10 % below the entry point for a few months.... We avoid the problem of triggering stops... Then I try to reimburse the premium as much as possible by selling calls (there are other ways) 

If anyone uses the options here, I think it would be interesting to discuss it… 😉

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