Never Do This With Your Stocks

Today, I want to start off with a question I've gotten a lot recently...

Can I enter my stops with my broker so I know I sell when I've hit it?

Never enter your stops with your broker...

Most brokers give you the option to enter your stops "into the market" – in other words, telling your broker to sell automatically if your stock falls to a certain price (a hard stop) or a certain percentage from its highs (a trailing stop).

But you should never reveal your stop loss to your broker or anyone else. Entering your stop price into the market is tempting for its convenience, but it leaves you vulnerable.

If they know you'll sell automatically at a certain price, investors or brokers who see your stop can temporarily manipulate a stock's share price to push you out of the position. So never enter your stops into your brokerage account as part of your order.

To be clear, we are not advising against stop losses.

Quite the opposite... Just track them on your own or through a service like our corporate affiliate TradeStops.

Using strict stop-loss rules to avoid capital losses removes emotion from the trade. When you're wrong, admit it and take your lumps. It's one of the most important rules to successful investing.

Remember, before you invest, know exactly why you're buying the stock and what would make you sell it.

Set yourself up to succeed by knowing ahead of time what your exit strategy is. Stop losses are a great asset for any investor, so start using them to monitor your portfolio today.

Of course, you can use a notebook or Excel spreadsheet for keeping track of your exit strategies. But ask yourself... how well has that strategy worked for you in the past?

If you've missed stops... and later regretted it... I recommend watching my good friend and colleague Dr. Steve Sjuggerud's recent interview. In it, he explains:

  • What he recommends you do with your money right now...
  • Exactly when (and how) he's personally planning to exit stocks...
  • And why most people will fail to exit stocks before the Melt Down comes.

Click here to watch.

Now, for the rest of this week's Q&A... As always, keep sending your questions, comments, and concerns to us at [email protected]. We read every e-mail.

Q: Hi. I love the bulletin. I know that extra-virgin olive oil is the way to go for cooking, but does the kind that comes in a spray can count or should I only use bottled oil? – J.W.

A: Stick to the bottled. Spray olive oil contains added ingredients to make it nonstick and sprayable (the aerosol cans are the worst offenders). That means you're not getting 100% olive oil. The olive oil in sprays is also more likely to be oxidized, meaning it has been exposed to too much heat or light or has sat on the shelf for too long.

Extra virgin is the highest-quality olive oil and uses no chemicals in the pressing process. It should also be cold-pressed, since higher temperatures reduce the quality of the oil. Extra-virgin olive oil contains monounsaturated fats (good fats) and antioxidants. It's the type we recommend adding to your diet.

If you want to have a spray handy, try making your own. Just use two parts olive oil to one part water. The water thins the oil out enough to make it easier to spray.

Q: In your recent bulletin, you did not mention that AARP's program Tax-Aide has been offering free tax preparation for many, many years now and there is no upper limit to a client's income to qualify for this free service which is run by volunteers. – Former Tax-Aide volunteer K.G.

A: Thanks for the tip, K.G. For folks who don't know, Tax-Aide is a free tax-preparation service from AARP. It's targeted mostly toward people 50 and older or those with low incomes. You don't even have to be an AARP member.

Anyone interested can learn more here.

What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
March 19, 2021