Be A Fool, Use Stops, Don’t Be Smart

The Foolishness That Helps Me

I always use a stop on a rising stock to protect me from myself. It is a human tendency to allow our stupid minds to convince us that we are smarter than everyone else. There is no substitute to placing a trailing stop to every position, especially when dealing with a rising stock.

The insiders have made the stock run up for a reason. No one knows when that run will come to an end. Sometimes the end is a pause, but the pause could be for months or even years, tying up your capital in a stuck or downward moving stock.

There are a couple of recent examples that offer a good test. Let me show and offer hints for ABVX first. And once you see the charts for yourself, I am pretty sure extending the same lessons to CELC further below would be a piece of cake.

The rising trend on ABVX is pretty straight forward and I did not put too much effort in pinpointing each and every point and price on its rising chart. Assume you are just as foolish as me and you follow a stop below the prior low at each stage.

And then in December 2025 it made a new high at 142.31.  The novice would have missed what the chart said to do. But if you look at the chart below, clearly the clue was there to use the right price to peg a stop.

You can take the time and make the effort to check the chart for ABVX on your own and see that the stop pegged correctly would have insulated you from any price shocks that followed.

Having seen the above example, what do you think you would have done with CELC? Here is the first chart, showing just a few key price points. You can do the exercise on your own and check on your end.

And suppose now you are given the following hint as shown in the chart below, what would you have done? The question is if you actually did it.

The stop only has one goal. To remove the human tendency from preventing me from doing the right thing. In other words, it helps you make the right decision at the right time.   Place the stop.  If the stock is a great stock as you feel it is, it will not hit your stop.   If it hits my stop, the chart is telling me that perhaps this was not as great a stock as I first thought.