Recent Portfolio Moves

Over the last few trading days, I did rebalancing buys of Lincoln National, Gehl, Charlotte Russe, Group 1 Automotive and Anadarko Petroleum.  As the market has declined, so has my cash position, from 18% to 8%.

One reader has asked my opinion on stop loss orders, and I must admit, I have never used one.  I use the “economic sell rule,” which tries to look forward at the value of companies, rather than analyzing past price movements.  I sell when companies no longer offer me a good return on my money versus other investments.  I sell a little in rebalancing trades, because there is value in redeploying fundsafter quick moves up.

Do I take some losses from not having an automatic sell rule when prices fall?  Yes, but it is more than made up for from the gains on companies that I would have sold , but didn’t.

Don’t blindly adopt a sell rule, but use your head, and estimate the future value of the company, rather than agonizing over the paper loss.

Full disclosure: long LNC GEHL CHIC GPI APC