I was thinking of how some investors, especially retirees, can protect themselves from massive sell-offs like we just had. This idea came to my head. What about using a "Trailing Stop Order" on a portfolio? (maybe this hibernation gives me to much time to think
These are typically used when you are buying or selling stocks. It sets discipline on when to sell. There is one set of diversified portfolio ETFs that you could do this with, the BlackRock iShares allocation funds, AOM, AOR, AOA. These are actually pretty good diversified "balance" funds, conservative, moderate and aggressive. The one closest to 60:40 allocation is AOR. This fund compares well to Vanguards balanced index fund VBINX. I think @davidrmoran
brought these ETFs to my attention a few years ago. I have not been able to find other balanced ETFs that are diversified like these.
The idea would be to hold one of these ETFs as your core portfolio holding, maybe the bulk of the portfolio or whatever % you deem appropriate. If you want to limit your loss to say 10% of the funds high you set up the trailing stop order to sell at -10%. You protect the bulk of your retirement savings. Especially important if you are already retired and massive 20%+ really hurts maybe more so than for people still in the accumulative stage.
Any opinions + or - on this idea? I am contemplating this idea in my retirement savings so that I am not a deer in the head lights.