Devoted to understanding the basics and fundamentals of investing

David wrote with some comments on Winners and Losers.  If I understood his points, he agreed that rules like selling after 5%, 10% or such are arbitrary.  He follows a long term buy and hold strategy it seems.  Find companies you like and hold on to them for their long term return.  His post did not address how to know when to sell or how to protect yourself from sudden drops in price.

David feels fortunate that he has his money in funds managed by professionals at this point in his life.  Then they can maximize the return on each security selection and they provide him with a diversified portfolio.  Those are certainly wonderful advantages of buying mutual funds or having a money manager handle your money.

But even fund managers are subject to the tendency to sell winners too quickly and hold on to losers too long.  They generally have very strict rules and guidelines to determine when they have to sell and when it would be desirable to sell so that they don't fall prey to this very real human tendency.

They have the advantage of watching the market all day each day and have alert systems in place to signal them of news or movement on the holdings in their portfolios.  They can respond to the market according to the rules their fund has established.  For those who don't have this luxury, using stop losses is a useful substitute.

David, what was the best investment in your holdings this year?  How much did it return?  How much did your overall portfolio return?  I'll share my best and worst for the last posting of this year.  I'm interested in hearing from other readers how they did.  So send them in!