IFB159: Trailing Stops For Value Investors and Aggresive Investing In Your 40s

Announcer (00:00):



You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.



Dave (00:38):



Welcome to the Investing for Beginners Podcast episode 159 tonight, Andrew and I are going to pick some time out, and you’re going to talk About some listener questions that we got recently. We’ve got some fantastic ones as always. And so we thought we would take some time and answer those on the air for you guys. So I’m going to go ahead and read the first question. It’s in two parts. So I’ll go ahead and read the first part of the question. We’ll answer that. And I know we’ll come back to the second part.



Dave (01:00):



So the first part is, hello, Andrew. My name is Tim, and I started investing in January of this year. I’ve been listening to the investors podcast around episode 42 now, and have been very grateful for the advice that both you and Dave have shared as it has helped me get a broad understanding of the stock market and the confidence to get my feet wet. I’ve also appreciated that I choose your podcast. I chose your podcast and ebook to get started as all the metrics and strategy of value investing general makes sense to me as a nerd who likes numbers, yay.



Dave (01:32):



The ratios and rationale behind them make so much sense. So the first question is listening through the podcast so far, I’ve heard both you and Dave talk about the importance of setting trailing stops to stop your losses before they get too far down, which makes sense at the time I am 27 years old, and I’m, it makes sense to hold for the longterm and not to buy and sell all the time. Both of these strategies seem to clash heads a little bit in the current environment of a stock market collapse. From what I have learned, I would think that the trailing stops are when the market is relatively stable, and stock is still hitting the trailing stop that you are talking about—otherwise, everything you need to be sold. And then the compounding of drip would not take effect. Also, I know that I have not lost money until I finally sell, from listening to some of the more recent episodes. It seems at times like those, it seems at times like these, that it is about whether you trust it and the research you’ve done in choosing a good company, is this the correct way to think of things? Or am I missing something? Andrew? What are your thoughts?



Andrew (02:36):



Yeah, this is a great question, Tim. So it kind of comes down to one of those ideas where it sounds nice, but in practicality, it’s not the greatest strategy depending on how ...