What is the most positive economic news that we have received over the last six months? I am using “news” to mean “unexpected” or “somewhat surprising.”

The answer that comes to my mind is the increase in the stock market. But if the stock market is up on the basis of little or no positive economic news otherwise, then that sort of says that the reason people are buying stocks is because the market has been going up. That’s not what one would call a sustainable model. So as of today, I am even a little lighter into stocks than I was yesterday, and I was relatively light yesterday. To be sure, in inflation-adjusted terms, the market is not actually at an all-time high. But I figure that whatever my willingness to buy stocks was 6 months ago, it should be less now, no?

Speaking of stocks, I know of a newsletter writer who recommends specific stocks and always adds what he calls a “protective stop.” So he might say, “but X at 20, but put in a stop-less order to sell if it goes down to 18.” This struck me as a strange strategy, but today I was pondering it and I think I have it figured out.

Suppose that the stocks that he recommends are really no better or worse than buying an index fund. So, without the stop-loss orders, if you followed his buy recommendations you would get the exact same return as the market. With the stop-loss orders, it’s as if you are buying the market portfolio along with a portfolio of out-of-the-money put options. In this case, though, you only pay the option premium if the market bounces around, so you buy a stock at 20, sell it at 18, then buy it back (or buy some other stock recommended by the newsletter) when it goes back up to 20.

I think that this approach minimizes the chances that you will regret taking the writer’s advice. If the market rallies, you will be happy with your gains. If it falls, you will be happy that your losses are limited. And if it bounces up and down you are unlikely to notice that the advice is giving you a tendency to buy at the highs and sell at the lows. So I think this strategy would appeal to regret-averse investors. But it’s not a strategy that appeals to me.