StockInvestor editor Paul Larson offers up practical tips on stop-loss orders, shorting, lawless geographies, and MLPs.
I’ve written extensively in the past about the strategy I am pursuing within Morningstar StockInvestor's Tortoise and Hare portfolios—focusing on wide-moat firms with high returns on capital that will compound their intrinsic values at above-average rates, and only buying when they trade at enough of a discount to our estimate of intrinsic value to provide a margin of safety. But these broad objectives don't mean I ignore the tactical details. Without further delay…
Stop-Loss Orders Make No Sense
On May 6, 2010, we experienced a “flash crash” that was like nothing modern markets have ever experienced. For instance, Tortoise Portfolio holding Exelon (EXC) traded below a penny at the height of the craziness. Moreover, Procter & Gamble (PG) went from roughly $62 to $40 in a matter of minutes, then popped back to $61 just as quickly as it had fallen. That drop represented about $70 billion of market value that was momentarily erased. That's a lot of toothpaste!
Paul Larson has a position in the following securities mentioned above: CX, EPD, MMP, PG. Find out about Morningstar’s editorial policies.