Posted by lae2 on December 02, 2008 at 10:18:43:
Does cutting your loses early apply to blue chip stocks the same as to volatile small cap stocks? Not easy to answer. The blue chips have become so affordable that the dividend, in some cases, pays the margin expenses.
A never ending problem with "cutting your losses early" is the losses generated by churning your account. Commissions, even at a measley 10.00 can add up in a hurry. That boring non-volatile blue chip may cost you on paper but there is the dividend. Plus, when the blue chip eventually moves upward it generates buying power. Take the margin money generated by a cadre of blue chips and use that money for "Shark Investing."
With a foundation of blue chips you can ride the market down with paper losses but maintain fixed income. When the blue chips turn; that is the time to take your accruing leverage and shark invest.