Key insights
- The post discusses a naive investment strategy involving a large S&P 500 position with a tight stop-loss order. While limiting downside risk, this approach is vulnerable to whipsaws and transaction costs, potentially eroding returns. The poster's return expectations are unrealistic. A major recession could trigger the stop-loss, but the strategy doesn't guarantee protection against significant market declines.
Hello everyone this may be a very stupid question. So I apologize right off the bat if it is. I'm brand new stocks I just put in my first $400 into the s&p 500. Ive read online that you can set your amount to automatically sell at a certain drop. My question is if thats the case than why couldn't someone put in $100,000 in the s&p 500 and just set it to automatically sell if it drops down to say $98,000? There would obviously be a $2000 risk but if it kept climbing than it would pay way more than a traditional cd or money market account. The way I added it up if I was to put in $100,000 it would pay me about $2,250 give or take a bit per month on returns from my calculations on the $400 I originally put in. So my main question Is my math wrong? And is there a way to sell before a certain drop if a major recession were to happen? Thanks for any help and once again sorry if this is beyond a stupid question.