 |
From Mike W.: Tom, I’m confused by your comments in the August 12 Daily: “I will never buy more of a stock as it gets cheaper (like I did with Bright Station).”
I understand about using stop losses and buying “dogs,” but what about Legacy-type stocks?
From Herman S.: Tom, I’ve been following you since the beginning. I enjoy and trust your advice. However, I was a bit confused by your statement: “Since then, I’ve always cut my losers very fast. Obsessively fast.”
This is different from what’s taught in the Legacy Portfolio… If the stock goes down, buy more!
I try to follow your “cut-and-run” advice for all my other allocations, but I enjoy buying Legacy stocks when they go down. It’s like shopping with a discount card. Can you clarify?
 |
Tom Dyson, publisher, Palm Beach Research Group’s Response: Mike and Herman, thanks for pointing this out. I’m sorry for the confusion. We definitely don’t use stop losses with our Legacy stocks.
Legacy stocks are the strongest, highest-quality companies in the capitalist system. They’re the best compounders of capital in existence. We want to own as many shares in these companies as we can… and never sell.
These shares are like currency. The more shares you own, the richer you are. So, when prices fall, we buy more, with both hands.
So yes, Legacy stocks are a clear exception to my trading rule… which is what I was writing about in the Daily: trading. The Legacy stock strategy is not trading. It’s accumulating.
Thanks for your letters.
From Linda H.: In the August 9 Daily, you ran 20 can’t-miss quotes by Milton Friedman. One PBD reader, Lisette C., said this was her favorite:
|
I’m in favor of legalizing drugs. According to my values system, if people want to kill themselves, they have every right to do so. Most of the harm that comes from drugs is because they are illegal. |
Wouldn’t you be living in a very sheltered world to believe this? How many innocent people are hurt every day because some person—who will do ANYTHING to get more money to buy more drugs—isn’t affected by conscience?
Even in my “nice” neighborhood, there are drug-related crimes. Some are minor, like breaking and entering, and some are more extreme.
A new drug has hit our streets. It goes by the name “Molly.” I won’t take up space here, but you can look it up and see how widespread and dangerous it is… to the person taking it, and to those he/she comes into contact with.
Reeves’ Comment: Linda, I know it may seem counterintuitive… but have you heard the news out of Portugal?
In 2001, the country decriminalized all drugs. The result: Over the next decade, the number of drug addicts dropped by 50%. The country’s drug abuse rates have fallen to among the lowest in the European Union. Learn more here and read an extensive study right here.