As a rule of thumb, financial advisors recommend cutting investment losses as soon as reasonably possible since chances are, a beleaguered company may continue to lose even more ground. However, on occasion, red-ink-printing enterprises like fashion retailer Gap (GPS) generate robust positive momentum, enabling stakeholders to exit out of their mistakes relatively unscathed – maybe even pocket a modest profit if lucky.
However, even here, investors interested in long-term success in the equity markets should prioritize capital protection. In other words, the dramatic pop in the afterhours session on Thursday for GPS stock may be a viable opportunity to sell into strength. Although management delivered surprisingly optimistic results for its latest earnings report, no guarantee exists that Gap can sustain the ride.
