Looks like I got whipsawed out of my positions on Thursday. It is frustrating, however, I remind myself of the importance of cutting losses. For relatively new investors, it is a math lesson. If a stock goes down 10% and is sold and put into a new stock the new stock has to go up about 11% to get the account to break even. Doable, but not easy.
If a stock is down 20% and then gets sold, the new investment will have to go up 25%. The math is $1000 - 20% = $800. To get $800 back to break even, requires a 25% gain. At the extremes, a 50% loss needs a double, a 100% winner to get to break even. A 75% loss will need a 300% gain ($1000 becomes $250, it is a long way to $1000 when starting at $250).
I had a bad day and it rattles me. I remind myself that a healthy mentality is that of a baseball relief pitcher. Mistakes happen, and percentages are what matter. I've been telling some people about Bill Gates' bad day when Microsoft took a hit. Gates lost approximately $5 billion in one day. Of course he still had about $45 billion after that loss, so no need to take up a collection for him just yet.
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