Have You Taken Your Insurance?

I may not like insurance like Prudential which a few of my friends ask me to join, but in business and stock trading, I feel that it is highly necessary to get an adequate insurance to cover further losses.

With the fall of JCI (Jakarta Composite Index) today to below 2,300 level, the movement in a few days will likely to go down further.  For you who are reluctant to sell your stocks, I suggest that you consider the act of selling as a kind of “insurance”.  Unlike large institutions, selling is cheap and easy to do for individual investors.  If the market proves to be falling further, then your “insurance” will have done what it’s meant to do.  It will cover your Capital from further losses.  But, if the market is bullish again in these few days, then you can always buy those stocks that you sold, even if the price is higher than what you originally paid for.  Consider that you have paid your insurance fee in that stock.

Insurance is always an annoying expense when you don’t need it, but if you need it, it can be lifesaver.  And in this kind of unpredictable market condition, an insurance is badly needed.  It’s always better to safeguard your Capital than betting it on a homerun.  Yes, there’s always a possibility that the market will go up tomorrow, but I won’t count on it.  One of the reason is that it has breach its support at 2,300, and is likely to fall more.