Are you saying that price stops are an ineffective method of managing risk as it comes at too high a price??? Are you suggesting a trader should average down?? Do you differentiate between day trading and investing?? "ONLY" a 50% drawdown??? Do you not make a distinction between a 10 stock portfolio vs a single asset?? Do you trade?
Of course it does.How many stocks double in a reasonable time frame? And I ask again,whats more likely, a stock dropping 50% and rebounding 100% or a stock dropping 50% only to fall another 50%?? You dont know,do you I fully understand the "limitations" of a lognormal distribution.but your whole argument is banking on a tail event to recover..dont you trade options?? It sounds to me like you are implying that a stock that is down 50% has a greater chance to double than a stock that is perhaps flat or up??? You keep on saying less likely,but you dont say less likely than option B.. Regardless,massive drawdowns are crushers especially when compounding..
If you read and heed his fervent suppositions here and apply them to your option stategies, you could buy 5 classic Lamborghini's. What are you, a f'n noob?
Nor has he given us one example which I went all Stoney... aka @stonedinvestor.... on with all caps in bolface type. https://www.elitetrader.com/et/thre...exists-in-trading.376628/page-12#post-5877517
Example? Real stocks don't get cut in half unless there's a problem. And when it happens to an index, all bets off.
The same Padu that sports a scratch handicap on the links? You go sonny-boy.... rock it for all it's worth.