Why did MM hold EML so long?
Hi James & Team, I have been enjoying the ride with MM over past years. However I wonder why with MM resources there was not a Stop Loss on EML Regards Kevin
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Answer
Thanks Kevin,
It’s our belief (derived from experience) that stop losses should be used in mechanical trading systems that reply totally on price. Whether that be momentum systems, regression or one of the many technical trading strategies out there, but when a strategy relies on a combination of fundamental & technical analysis i.e. not as mechanical in nature, then stop losses are counter productive over time. There is no holy grail here, stop losses will work at times and not at others but I don’t believe stops at say 5% or 10% have any logic as its purely a predetermined monetary decision as opposed to taking into account the situation at the time and making a call i.e. markets are like a constantly evolving amoeba and should be evaluated as such.
In terms of EML, we covered the stock in this weeks Portfolio Positioning Report – Here
