re keeping losing stocks too longif I may add ....
This rapid and unexpected drop in Oil has taught this old 'trader' that everyone gets blind sided at some stage. The markets do not respect good companies in a cyclical sector.
I now more clearly see the 2 types of essential safety methods to protect ones capital:
Type A) A very well diversified portfolio mitigates sectors that fall off a cliff IF you have only allocated 5% max to any position/sector, and are willing to wait out market cycles.
OR ... For those not very well diversified and sticking to 5% per stock ....
Type B) Aggressive trailing Stops on positions in the black, and/or the willingness to set limit Stops on ALL losing positions so you do not ride crashing stocks down. (Especially important for those with less skill reading balance sheets like myself, yet were stupid enough to forego Stop Loss limits, instead placing their faith in the opinion of 'experts')
Confessional: I was over weight oil stocks, got complacent and listened too much to 'experts instead of following my tedious habit of Stop losses even on good stocks.
I will have to wait this downturn out and double down where feasible When Oil turns is anyones guess, but turn it will and Oil will have its day again.
Happy New Year