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There Is No Substitute for Thinking!

Sigma Investment Counselors

August 27, 2015

From the August 26, 2015 Wall Street Journal article titled “Trading Tumult Exposes Flaws In Modern Markets.”

“Lans­ing, Mich. based fi­nan­cial adviser Theodore Feight had set up an au­to­matic sale for iShares Core U.S. Value ETF MMIUSVMM if it were to fall a cer­tain amount. The ETF tumbled 34% in early trad­ing, and in­stead of Mr. Feight’s po­si­tion sell­ing at his tar­get price of $108.69, down 14%, it sold at $87.32, off 31%. By noon, the ETF had bounced back, and it ended the day down 4.3% at $121.18.”

This is precisely why Sigma Investment Counselors does not use stop loss orders for client securities sales.  There is no certainty that the shares will be sold for the stop loss price established.  Someone has to be responsible for monitoring and placing the trades.  Put differently, there is no substitute for thinking.  Period.

All questions and comments are welcomed.

Bob Bilkie, CFA®

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