Baseball and Investing: Defense

Stock highlight of the day: GRRR

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Defense and offense. It's a primary theme in all sports. In baseball, reference to defense tends to be about the other eight players on the field. The pitcher is your primary defensive player but strong performance by the other eight fielders keeps runs against down. 

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In the investment arena, there are many defensive tactics just like the eight players on the diamond. How is your defense against stock market losses?

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​The primary defensive maneuver is to cut losses. On any buy, selling the position before the loss gets large, if in fact the stock goes lower, is a critical play. This particular strategy separates great investors from the rest of the herd. 

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Execution strategy: On a new buy, enter an open "stop loss" (sell) order. Leave it open for several months or more.​​

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                    This is a regular series on how baseball and investing are remarkably similar. 

                    Be sure to check back in. Go stocks!

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