Ask Colin

Have you been concerned recently where shares have risen considerably and the distance from the hard stop is great?

The detailed question (September 2015) was:

I have been thinking about my investment plan around situations where particular shares have risen considerably and the distance from the hard stop is great.2 cases in point RHC which I also own and LLC which I do not. I understand where you set your soft and hard stops and the reasoning behind this and also your other consideration potentially to sell when it goes below a previous trough but has not yet hit the hard stop.

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Eventually I will find something that sits well for me but was just wondering whether you also have had these concerns of late and whether it has made you think of revising your investment plan under these circumstances?

I am not sure I can help you much in your thinking journey as you develop an investment plan that suits who you are and your risk tolerance.


Of help will be the article on Stops Losses on the Educational Articles page.


Also, there are  71 questions I have answered on stops on the Ask Colin page. Some of these may be of assistance. At least one is very close to your question.


I have not had any concerns of late on this issue – see my article published last night on Corrections in Bull Markets. Then again, my methods have been developed over 51 years of testing and experience. That said, I have commented from time to time on specific situations and possible lessons – the latest being in the Lend Lease Group journal published today.


So, basically, it is the thinking and testing, then rethinking journey you have to make to develop a comfortable investment plan, then testing it on real investments and tweaking it as your experience grows. Nobody can give you answers, in fact if they did, because you have not done the thinking you will lack the conviction and abandon it under pressure in the market – that I will guarantee.