I finally made it over the big water hazard and arrived safely in Germany. As usual, jet lag will be my companion for a few days, and the 9-hour time difference is challenging at times when trying to get things done. So bear with me, if my email responses are a day late.
Reader Leon had a follow up comment on the sell stop discussions of the past few weeks. Here’s what he said:
Thanks very much for your timely and insightful comments and services. I enjoy reading your comments. We are in agreement on many things.
I’m on the Institutional side of Schwab as you are. In your comments, you have addressed trailing stops many times and I agree with their use–however, Schwab Institutional doesn’t offer trailing stops. In lieu of not having trailing stops, I have to key them in and then adjust frequently or use mental stops. How do you deal with this situation?
As I have commented before, whether a custodian offers pre-set sell stops or not makes no difference to me. I track them separately on a spreadsheet and, only once they are triggered, will I place the order the next morning. There are 2 reasons for this:
1. Since I only work with day-ending prices for sell stops, there is no need to enter them prematurely.
2. You are not subjected to intra-day market noise that may not have any bearing on long-term market direction.
In other words, whether I buy mutual funds or ETFs, only the closing prices will be considered when making sell stop decisions.