My video got 50,000 views

One of my videos on YouTube just passed 50,000 views. It’s called Never Use a Stop Loss, but it’s about much more than that.

Not exactly viral by YT standards. But the message really matters if you want to build wealth properly, and passively.

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Before we get into it .. What is a stop-loss ?

It’s an instruction you leave with your investment platform: if a share or ETF falls by, say, 10%, it’s sold automatically.

I can assure you that, if you’re a passive long-term investor, you don’t need a stop-loss.

Moreover, having one often means selling at a low, when you should be buying (evidence below).

Further down, I share a much better habit our investors use to buy at the lows. And how we get paid income while we wait to buy lower.

Why did this video get traction ?

It challenges a common assumption.  A stop loss sounds protective so why wouldn’t you have one?

In my fund management days I never used one. Nor did many colleagues.  We knew it rarely served its purpose and gave a false sense of security.

Why? A stop-loss turns a temporary dip into a permanent loss. And those dips are quite common …

How often do sell-offs happen ?  (see chart below)

Almost 100 years of data show stockmarkets have experienced 3% dips 7.3 times a year, on average.  5% declines 3.4 times a year. And 10% sell-offs 1.1 times a year …

That‘s the key point: most 10% falls don’t become 20%. Since 1928, 2/3 of them never became -20%.

Most of the time, a 10% stop-loss just sold you out in a normal correction, which then recovered without you being invested.

Recoveries are normal – as shown in the video …

The data shows that most 10-20% declines fully recover within a year.  And markets rise, on average, in 8 years out of 10.

You saw examples of each in the video. The Covid crash in 2020 and the tariff sell-off in April 2025 were sharp falls. Both times, a 10% stop-loss would have sold you out in the panic.  And both times, the market went on to recover and make new highs within months.

Which is the real problem. A stop-loss gets you out but never tells you when to get back in.  And in my experience, nobody can time that consistently. Not Warren Buffett, and certainly not the pros.

So where does the stop-loss habit come from? Trading …

Short term traders use them frequently, especially with volatile stocks. That’s when you might consider a stop-loss.

Or if you were playing a short term event – eg taking a bet on Nvidia’s next earnings announcement.

But passive investors should never use a stop-loss for set-and-forget positions (which comprise the majority of our portfolios).

For investors, as opposed to traders, the wealth-creation question is simple …

Would you rather SELL or BUY at a low ?

A stop-loss makes you sell after prices have fallen.

But when quality assets go on sale, a long-term investor should be doing the opposite …

How we help our investors buy lower …

It’s called pound cost averaging. Very simply, it means drip-feeding your money in over a set period, Vs investing all on day one.

Say you have £60,000 to invest. You might put in £10,000 a month in 6 monthly instalments.  If the market dips in month 3, that month’s £10k buys more shares. So the dips start working in your favour.

One of our clients was drip-feeding a large cash sum into the market when Covid hit. He felt uncomfortable buying as the world was seemingly ending. But he kept going with his monthly instalments.  In the end, he had bought into the market at highly attractive levels.

Pound cost averaging lets you BUY at the lows.  Stop-losses make you SELL at the lows.

We show our investors exactly how to set this up, step by step: what to buy, through which platform, and over what period.

Finally, the best bit:  buy lower, AND get paid income to wait …
Many of our investors who are still building their portfolios take this a step further using options.

Just like property:  imagine offering below the asking price on a house you’d be happy to own, and the seller pays you every month while they decide.

Options work in the same way: You choose a quality ETF/share that you’d like to buy anyway, but at a price below today’s level that you’d happily pay.

You then get paid monthly income for agreeing to buy at that price (the strike price).  If the market price falls to your strike price, you buy there.  If it doesn’t, you keep the income.

Whichever way the share price goes: up, down or sideways, you keep the income anyway.

Recently, one of our clients wanted to buy a Bitcoin-related ETF but was hesitant after a run-up.  So he used options to commit to buying at a lower price, receiving 3.6% in one month while he waited (Bitcoin ETFs are more volatile, hence the higher income level).

The catch: if the price falls below your chosen level, you still buy at your price. Which is why we only do this on ETFs and shares we’d be happy to own anyway.

If you haven’t seen the video yet, watch it here. (The options part starts around 8 minutes in.)

In Summary …

1. Sell-offs are common, including during up-years
2. Recoveries are normal too.  But a stop-loss prevents you participating in one
3. Most 10% falls don’t become 20% declines. So a typical stop-loss often sells you out at the worst time
4. Pound cost averaging lets you BUY at the lows (Stop-losses make you SELL at the lows)
5. Options let you buy lower (if the price falls) and get paid while you wait

Sitting on cash and not sure how to put it to work, without trying to time the market?  Book a 15-minute call and we’ll share a lower-risk way.