Optional stoping theorem suggests that adding a stopping rule to our portfolio won't change the expectation. Any explanation from practical, mathematical or behavioural finance perspectives?Thanks

Two words: utility theory. As a risk-averse investor, you don't only care about the mean return of your portfolio.

shop loss or stop loss ?

QuoteOriginally posted by: wh408Optional stoping theorem suggests that adding a stopping rule to our portfolio won't change the expectation. Any explanation from practical, mathematical or behavioural finance perspectives?ThanksIf you find a stopping rule (based on the past and present realisations, no speculation or risk taking on the future) that will change your expectation (and keep variance in the same level) do it ! that is all, note that you are not the only guy in the market and other people will do the same and the strategy loses it effectiveness.This is not the case in reality so if you have high volumes, lot of expertise and direct access to the market you can find those "patterns" before anyone else but don't think it will be forever and you have to get also "an exit strategy". G. Sors has a good philosophical explanation on this, in markets thinking get involved in contrast to physical phenomenons (reflexivity principal), the firsts guys who get in make money, the latests lose it.From the behavioural perspective this exist, however, if this frictional propriety is only a second order effect for your business. You can suppose that they don't exist and move forward in your modelling. But if it is the basic constraint for your strategies, you must take it in account and put reserves.

QuoteOriginally posted by: ppaupershop loss or stop loss ?shop loss when cost of sales > price of sales

QuoteOriginally posted by: wh408Optional stoping theorem suggests that adding a stopping rule to our portfolio won't change the expectation. Any explanation from practical, mathematical or behavioural finance perspectives?ThanksI know you're thinking of short-term rules and, from a practical point of view, they cangive some comfort. There can be unintended consequences, as shown by the Flash Crash.Here's a long-term stopping rule, fully justified by theory:Draw down your risk over time, esp. prior to death.

QuoteOriginally posted by: AlanQuoteOriginally posted by: wh408Optional stoping theorem suggests that adding a stopping rule to our portfolio won't change the expectation. Any explanation from practical, mathematical or behavioural finance perspectives?ThanksI know you're thinking of short-term rules and, from a practical point of view, they cangive some comfort. There can be unintended consequences, as shown by the Flash Crash.Here's a long-term stopping rule, fully justified by theory:Draw down your risk over time, esp. prior to death. Yeah, that reminds me an explanation of the low volatility on Japanese stock and housing markets. The generation with most wealth are much older than other countries especially comparing to China.

QuoteOriginally posted by: daveangelQuoteOriginally posted by: ppaupershop loss or stop loss ?shop loss when cost of sales > price of salesdon't forget the five-finger discount can play a role

QuoteOriginally posted by: ppaupershop loss or stop loss ?Sorry for the typo, I mean stop loss.

QuoteOriginally posted by: wh408QuoteOriginally posted by: ppaupershop loss or stop loss ?Sorry for the typo, I mean stop loss.dang, and daveangel gave you all that great info on shop loss

QuoteOriginally posted by: ppauperQuoteOriginally posted by: wh408QuoteOriginally posted by: ppaupershop loss or stop loss ?Sorry for the typo, I mean stop loss.dang, and daveangel gave you all that great info on shop lossone does one's best although it does feel like casting pearls before swine sometimes.

QuoteOriginally posted by: daveangelQuoteOriginally posted by: ppauperQuoteOriginally posted by: wh408QuoteOriginally posted by: ppaupershop loss or stop loss ?Sorry for the typo, I mean stop loss.dang, and daveangel gave you all that great info on shop lossone does one's best although it does feel like casting pearls before swine sometimes.and you being a muslim and all, that's doubly bad, swine being up there with apes and jews

QuoteOriginally posted by: AlanQuoteOriginally posted by: wh408Optional stoping theorem suggests that adding a stopping rule to our portfolio won't change the expectation. Any explanation from practical, mathematical or behavioural finance perspectives?ThanksI know you're thinking of short-term rules and, from a practical point of view, they cangive some comfort. There can be unintended consequences, as shown by the Flash Crash.Here's a long-term stopping rule, fully justified by theory:Draw down your risk over time, esp. prior to death. If there are no problems or constraints for sort selling, here is a arbitrage strategy:Short huge amount of stocks and pay your bora bora trip, when arriving to the maturity short sale the stocks for a new maturity to do you engagements.....and continue doing this until death.Ps: make sure that you get the highest amount in the first trade for you retirement