Exit Strategies

Unfortunately, picking the next winning stock is only half the battle. Many investments have strong gains, but end up losing because investors fail to exit their holdings at the right time. Trailing stop orders are one way to help mitigate this issue. (See article here, Yahoo Finance.)

History Lesson: Momentum

We often talk about buying low and selling high, but many individual investors often do the opposite. Particularly in retail accounts and 401(k) plans, investors are often "late to the party," waiting until the market hits a high to reenter. This behavioral bias results in momentum that may drive the market higher, but how long is the key question. Further, investors would be better suited taking a more disciplined periodic investment approach. With the market just hitting a high, this issue is currently at play. (See article here, WSJ.)