Page 364 - How to Make Money in Stocks Trilogy

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• C HAP T E R •

When You Must Sell and Cut

Every Loss . . . without Exception

Now that you’ve learned how and when to buy nothing but the best stocks, it’s
time for you to learn how and when to sell them. You’ve probably heard the
sports cliché: “The best offense is a strong defense.” The funny thing about
clichés is they are usually true: a team that’s all offense and no defense sel-
dom wins the game. In fact, a strong defense can often propel a team to
great heights.
During their heyday, when Branch Rickey was president and general
manager, the Brooklyn Dodgers typically had good pitching. In the game of
baseball, the combination of pitching and fielding represents the defensive
side of a team and maybe 70% of the game. It’s almost impossible to win
without them.
The same holds true in the stock market. Unless you have a strong
defense to protect yourself against large losses, you absolutely can’t win big
in the game of investing.

Bernard Baruch’s Secret Market Method of Making Millions
Bernard Baruch, a famous market operator on Wall Street and trusted
advisor to U.S. presidents, said it best: “If a speculator is correct half of the
time, he is hitting a good average. Even being right 3 or 4 times out of 10
should yield a person a fortune if he has the sense to cut his losses quickly
on the ventures where he has been wrong.”
As you can see, even the most successful investors make many mistakes.
These poor decisions will lead to losses, some of which can become quite

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