A Happy Holiday Stop-Loss Reminder

Although we’ve seen some push and shove during the last several weeks in stocks, looking at this market through a 52-week lens really tells the story of a bull on the loose since early March.

The chart here of the S&P 500 is unequivocal — 2009 was a most-outstanding year for stocks. If you were long in this market since March, then congratulations! You most likely have a lot of unrealized gains as we head into 2010.

My recommendation now, however, is to make sure you don’t let those gains evaporate. It is essential to have stop losses set on all of your invested positions, as we don’t know when this market run could come to a sudden and painful halt. If we do see the market give back in 2010, stop losses will ensure that you don’t get caught up in the selling wave.

So, this holiday season, give yourself a present by setting stop losses. If this market gets a visit from the Grinch, then you’ll have nothing to worry about.