Mr Bearbull 

Rules of the game

Mr Bearbull

Mr Bearbull

A reader sent in the following letter: “I operate a stop-loss of 25 per cent against the purchase price of each holding, gradually tapering to 12.5 per cent. When I sell a stock, I won’t consider a re-purchase until its price has fallen a further 20 per cent. During the sell-off in March I ended up selling my entire portfolio. But I knew the market would rise sharply and I didn’t want to be out of it so I also started buying. I thought I was prepared for a rapid upturn, but was hoping to have a few more weeks to take advantage of low prices. Obviously I have also incurred heavy dealing costs, so my portfolio is almost 14 per cent down from the start of the year. I think I should have done better, but how? What should I have done?”

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