Apprenticed Investor: 10 Lessons Learned in the Selloff

Tscm_1The latest "Apprentice Investor" column is up at 10 Lessons Learned in the Selloff.   

The column takes a look a what investors and traders can take away from the big whackage in May 2006. I point out in times like these, investors may find it instructive to step back and see the bigger picture. Sell-offs and portfolio damage such as the recent market shellacking don’t have to be all bad. There are lessons to be learned.

What follows are the top 10 lessons astute investors might have picked up — or at least may have been reminded of — during the May 2006 selloff.

What are the 10 things? Here’s the list:

1) ‘Cheap Stocks’ Can Always Get Cheaper

2) Macro Issues Matter

3) Oversold Markets Can Become More Oversold

4) Support & Resistance Don’t Always Hold

5) Investors Have Short Memories

6) A Major Shift Is a Subtle Process

7) Stop Losses Are Lifesavers

8) Money Management Is Crucial

9) When Your Timing Is Off, Step Away

10) Smart People Do Dumb Things

Be sure to check out the column for the full explanation of each of these items; its posted on The (free).


Prior  "Apprentice Investor" columns can be found here.


10 Lessons Learned in the Selloff
5/30/2006 10:16 AM EDT

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What's been said:

Discussions found on the web:
  1. roarkiangalt commented on May 31

    I think it was the FT last year that led with the headline to the effect of Marcro economic issues to overshadow all else. definitly going to be opportunities to buy cheaper…

  2. B commented on May 31

    Your quote-

    Benjamin D’Israeli: “What we have learned from history is that we haven’t learned from history.”

    Some other dummy said something similar about Wall Street. Some guy named Benjamin Graham: “Wall Street learns nothing and forgets everything.”

  3. ndk commented on May 31

    My big duh-in-retrospect comes from the way all the markets began to trade in synch. When oil, commodities, bonds, and stocks all start to go up or down in lockstep, it’s clear that money was the dog and the global economy the tail. When the BoJ began its mop-up, that should’ve been the shot across my bow.

  4. Uncle Jack commented on May 31

    “The column takes a look a what investors and traders can take away from the big whackage in May 2006.”

    Talk about a perspective problem. If people think this little selloff in May was “big whackage,” they’re going to wet their pants if they get a real selloff.

    BR: That’s covered in # 5: Investors Have Short Memories — and talks about the annual whacks of 10% in l1996-2000 period, and the five selloffs ranging from 24% to 46% hits during the 1966-82 era!

  5. Ned commented on May 31

    On the nose Uncle Jack. Or should I say Uncle Jackage!

  6. SINGER commented on May 31

    In my opinion this was one the most well written, on point pieces yet…

    Respect to B Rit…

    PS I’ve been turning people on to the BP and across the board everyone loves it..

    Keep on keepin on playa…

  7. Bynocerus commented on May 31

    Yo Singer: Making sure we give mad props to Mr. Ali G, the term is “Respek.” But you’re right – an excellent piece.

  8. Robert Cote commented on May 31

    An absolute gem. I especially took to heart the impatience and step away comments. Echoing another commentor if May was a “big whackage” haircut then the correction will be what? A “minor decapitation?”

  9. jm34 commented on May 31

    maybe Bill Cara will take “issue” w/ you here also !!!

  10. sydney falco commented on May 31


    i’m taking the UNDER for the 2pm announcement.

  11. muckdog commented on May 31

    Good column, BR. I think we’ve learned that …

    * The mid-term election cycle is alive and well.

    * Just because somebody says “Booyah” and your stock goes up afterhours, it doesn’t mean your stock will up a few weeks down the road.

    * If the DOW leads, watch out!

  12. ~Nona commented on Jun 1

    What always impresses me about Barry’s writing is that it’s so damned good even (or especially?) when he turns his stuff around so fast.

    Barry once said: figure out your edge. I’ve figured out mine (I think): patience.

  13. jabbo commented on Jun 1

    #7 should better read Stop – Limit losses not STOP losses as these type of orders become MARKET ORDERS once hit and these are quite dangerous in volatile markets.

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