What are Weak Longs?
Weak longs are investors who buy a stock (known as being "long"), but who will sell it at the first sign of a price decline.
How Do Weak Longs Work?
Weak longs tend to be traders, not investors. Short-term traders typically only own a stock long enough to capture a price gain. They are not interested in holding the stock as a long-term investment.
Weak longs don't want to take a loss on their short-term investment. A weak long will typically set a tight stop-loss order that instructs his/her broker to sell an investment if it losses even a small amount of money.
Why Do Weak Longs Matter?
Weak longs piling in and out of a stock can make that stock's price very volatile. Consider: If most of the people buying a stock are weak longs, when the price declines for any reason at all, the stop-losses that the weak longs have set will be triggered, causing a rash of selling and driving the price down very quickly.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
