Why it pays to cut a loss

Even long-term investors should have a clear philosophy for deciding when to cut an investment. Cris Sholto Heaton explains why.

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Many investors never use stop losses. They tend to view them solely as a tool for short-term traders who often use leverage (borrowed money) and can be wiped out by a few big, ill-timed losses. If you're investing for years ahead, your portfolio is diversified and you don't use leverage, the threat from the odd big loss doesn't seem vast.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.