I completely agree with OP, and there are many other misleading rules such as 1. Cut the losers, let the winners fly. 2. Never add shares to your losing positions. After I started doing the opposite, things turned around overnight!
I have a friend who actually made money by cutting the winners and letting the losers fly. However, I am not sure how long it will last until he go bust. His win rate is very high. I believe there are no specific rules to making money from the market. If it is making money, it works. There should be no rules, no beliefs.
A lot of people do this, cut winners, let losers fly, add to losing positions...and it works!! But only in the short term. Long term, it's a losing strategy for a trader. For an investor it might work though ...the adding to losing position thing. I doubt if cutting winners and letting losers fly works in the long term for anyone.
Baron should change the name of his website! Elite is clearly not correct. If you cut the winners and let the losers run you can only lose money. Because if you let the loser run and it becomes a profit you will cut it and miss profits. And 50% or more of the losers will go deeper and deeper in losses and never come back. So in the best case you will have a few small profits (that you will cut quickly because you only want losing positions) and lots of big losses as you don't cut them. But don't worry your broker will cut it for you the day you wipe out your account.
I know somebody who did that too. Made over 1 million the first year and after a few months in his second year he lost over 10 million. Wipe out completely and lost his business too. He went short S&P 500 end of 1994. With hundreds of contracts and several daily margin calls. The margin calls stopped when he was wiped out.
I can't say how it works with long term, but I have a 100% winning rate since I used it two weeks ago. It's a pretty good result for an active day trader. Of course it's not as simple as sitting on a losing trade and do nothing. You need to predict the reversal and buy at the lowest price, find a good price and timing to add more shares if the trade loses. Those who follow the books cut their losses to me, and I sell to them after the trend forms.