7    Minimizing Risk and Cutting Your Losses: Your Personal Built-In Stop-Loss Plan

NOW THAT YOU understand the impact losses can have on a portfolio, you can take the necessary actions ahead of time to make sure to keep potential losses in check if and when they occur. It’s time to put in place your own personal plan to stop the losses, what the “New ROI” equity strategy refers to as stop-loss.

As you’ve read throughout these pages, the solution to avoiding losses clearly isn’t to stay out of equities altogether. Equally implausible is the argument that if someone can’t risk loss of principal, he or she shouldn’t be in the stock market. Or, the argument continues, that person should at least be invested in less volatile investments like money-market ...

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