There Is No Substitute for Thinking!
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®