Outside the Box: When to sell a stock before it’s too late

The main problem with most investors is that they lack imagination.

General Electric is a single-digit midget. Who could have predicted that? I have been speculating about the probability that GE GE, -0.92% could go bankrupt. Bankrupt? A stock that was in the Dow Jones Industrial Average DJIA, -0.24% for 100 years?

Yes, bankrupt. Option prices suggest a probability of about 2% to 3% that GE will go down for the dirt nap. In finance, good things tend to get better, and bad things tend to get worse. Turnarounds are exceedingly rare. And trend followers know this.

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