Ax, What Is A Stop-Limit?

Hell if I know. Until recently, to be blunt, I thought stop-limits were for cowards (insert stronger word here). I based this on much reading of supposed expert limits of 10%, 20%, the "thus you can never lose more than x-percentage" theory that essentially guarantees losses. At one point in February, my financial and homebuilder puts were down 50%. Had I put stop-limits on, I would've been stopped and my choices going forward would've been limited.

As we know know, 6/7 of those puts did very well, posting a combined 20% return in a very bad market.

Let's move forward to July 15 with oil near $150 and financials fighting each other for biggest daily loser. Mindful, but not fearful enough of the insidious Fed and Paulson, a series of events including limits on short-selling of the very companies I shorted, and "great results" from Wells Fargo and JPM (who within 2 weeks announced equivalent 3rd quarter losses), wiped out 100% gains on 4 of my puts in about 3 days.

Like a blackjack player using house money, instead of employing stop-limits to secure at the time what would've been a yearly gain of 50%-60% and a market beating performance of almost 80%, I added positions in BAC, WB, and KMX. I sold everything on 9/10, and now stand at a yearly gain of over 12%. As I mentioned just last week, we were only 300 points from our July 15 lows, and yet some financials are up nearly 100% in that time. To further explain the madness of this market, had I sold the morning of 9/11, my yearly return would be closer to 17%. By that afternoon, my return would've been down to 10%.

I apologize for not pushing myself and my readers to sell some or all of their gains on 7/15. I no longer think stop-limits are evil but I do think belief in your calls and research take precedent. We only need to revisit my shorts in WM and LEH to see this. At one point, down in both, I made out for 40%-50% gains. A little more courage and well, we know now that they are both near 0. LEH 1/09 $22.50s would've produce over a 600% return. It's even easier to kick myself on a day like today where gains would've been substantial. But given the Fed's recent track record, it was hard to know Wed. that no bailout was coming.

So, I will continue to swing for the fences. I will continue to believe that a potential gain of over 100% is always greater than a 100% max loss. I will continue to ignore the bulls, who, like Bove and even short-seller by title only Kass, who recommended Lehman as strong buys at $15 and$12 respectively, have led their followers to their financial deaths, and hope to continue, even with admission of error, to beat the market by 30%.

Not posted but 2-2 so far with picks. Had USC andGB this weekend, Colts blew me up last week and NO blew a late 9 point lead to even me out. I promise more football from here on out.