為何timing之人時常強調 cut-loss?

The Intelligent Investor's Chapter 8 [The Investor and Market Fluctuation]

Investor longer-term bonds may have relatively wide price swings during their lifetimes, and his common-stock portfolio is almost certain to fluctuate in value over any period of several years.

The investor should know about these possibilities and should be prepared for them both financially and psychologically.


Market Fluctuations as a Guide to Investment Decision
Since common stocks, event of investment grade, are subject to wide fluctuations in their prices, the intelligent investor should be interested in the possibilities of profiting from these pendulum swings.

There are 2 possible ways by which he may to do this :

1. timing
2. price

By price, we mean
The endeavor to buy stock when they area quoted below their fair value and to sell them when they rise above such value.

By timing, we mean

1. The endeavor to anticipate the action of the stock market, to buy or hold when the future is deemed to upward, to sell or refrain from buying when the course is downward.
2. Pretensions of stock market forecasting, innumerable predictions which appear almost daily.
3. To make profit in a hurry. The idea of waiting before his stock move up is repugnant.

In our views, those formulas(timing) that gain adherents and important do so because they have worked well over a period, or sometime merely because they have been plausibly adapted to the statistical record of the past. But as their acceptance increase, their reliability tends to diminish. This happen for 2 reasons:

1. the passage of time bring new conditions which the old formula no longer fits.
2. in stock market affairs the popularity of a trading theory has itself influence on the market's behavior which detracts in the long run from its profit-making possibilities; it would make the market advance or decline by the very action of its followers when a buying or selling signal giving. ("stampede" of this kind is, much more of a danger than an advantage to the public trader.)

一只牛﹕
理由(1)讓我終於明白為何timing之人時常強調 cut-loss。
理由(2)讓我謹慎﹔人越出名﹐回酬就越低。

A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer. But what about the longer term and wider changes?