Personally, I don't see anything magical in one person who happened to start off his investing career 4 to 5 years ago, when the S&P 500 had moved up to, say, 1000, a reasonable increase above the 750 bottom, compared to another who had started 10 years ago.
The later investor would have shown a (((1760/1000)^1/4.5years)-1) x 100 = 13.4% annual compounded increase which is nearly double the 7% obtained by the investor who began 10 years ago.
And the young investor who may have started off on the 17th. of August 2012 when we began the SI Portfolios on my board. He/she would now be showing an investment gain of 28% from the S&P 500 ETF.
Incorporating, for example, a 10% trailing stop loss should lock in about 16% of their gain to date.
In addition a Stop Loss is a means of Insurance against an investment loss. In a way it defines the amount that you are prepared to lose in your investment. Investment on the stock exchange can be very lucrative. But with that comes risk .... the greater the possible return the greater the risk. And a stop loss can mitigate that risk.
Personally, I would advise staying away from so called "top-notch fund managers". Any young person who is prepared to spend some time getting acquainted with the stock market and its most successful investors, would do far better by walking in the footsteps of Warren Buffett who, as you quite correctly stated, has consistently outperformed most others.
A young investor would have done pretty well if he had put money into Buffett's ongoing top 10 stocks in terms of his holding in those stocks.
We did that 17 months ago and have obtained a gross return of over 18% to date. Only one stock in ten, IBM, is appreciably down to date. |
