The Assassins' Rule 2: Kill Losers After a Fixed Amount of Time
Sell losers quickly
The Assassins' Rule 2 is about selling losers quickly after a fixed amount of time. This involves setting a time limit for the investment and selling it if it has not performed well within that time frame.
- Sell losers quickly after a fixed amount of time
- Set a time limit for the investment
- Sell the investment if it has not performed well within the time limit
- Set a time limitDetermine the maximum amount of time you are willing to give the investment to performPro tipUse a time limit that is based on the investment's volatility and market conditionsWarningBe careful not to set the time limit too short, as this can result in unnecessary losses
- Monitor the investmentRegularly review the performance of the investment and adjust the time limit as neededPro tipUse technical analysis to identify trends and adjust the time limit accordinglyWarningBe careful not to overreact to short-term market fluctuations
- Sell the investmentIf the investment has not performed well within the time limit, sell it and realize the lossPro tipUse the proceeds from the sale to invest in a new opportunityWarningBe careful not to hold on to a losing position in the hopes that it will recover
An investor bought shares in the Royal Bank of Scotland at £22.29 and sold them at £18.62, realizing a loss of 16%. If the investor had not sold, they would have required a return of 667% to break even, which is highly unlikely.
An investor bought shares in Compass Group at £3.19 and sold them at £3.04, realizing a loss of 5%. The stock went on to return 143% after the sale.
The rule was developed by a group of successful investors known as the Assassins, who believed that selling losers quickly was essential to achieving long-term success in the markets.