Stop Losses for Small Caps

Tom, I just subscribed to Cabot Small-Cap Confidential, and I am preparing to enter my positions this week. Do you use stop loss numbers, or are these markets too volatile?—A.B.

Tom Garrity: In my opinion, stop losses aren't of great value with small-cap stocks since they are so thinly traded and volatile. As you will observe, I generally hold a position in a company until its services or products no longer carry pricing power or market dominance. As far as profit taking (of course review your own tax situation before incorporating any plan), when gains achieved are superior to historical market returns, it's always a good time to pay yourself by selling some stock while retaining a core position in the stock.


Tom GarrityThomas Garrity
Small Cap Investment Specialist, Analyst and Editor of Cabot Small-Cap Confidential

Tom Garrity is analyst and editor of the limited-subscription newsletter, Cabot Small-Cap Confidential. A lifelong investor, Tom has been a stockbroker, stock analyst, venture capitalist, and portfolio manager. His long career and varied experiences taught Tom to make investments only when the odds of winning significantly outweigh the risks. He applies this philosophy to every stock he recommends in Cabot Small-Cap Confidential.



 

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