From Paul Fischer: “You’ve recently explained how Stop Losses and Stop Limits work, and the pros and cons of each. I was wondering if you could explain trailing stop losses. I have heard the term, and I know what I think it might be but I would be grateful if you could clear it up for me.”

Actually, I didn’t know the answer to this one, so I asked one of Ceres’ trading managers, Mike Reynolds. His reply was that some firms — not Ceres — will allow their customers to place buy orders on stocks, with a contingent stop order that will activate once the buy order executes. In other words, you’d say, “Buy 100 Dell at 77, with a stop-loss at 74.” If the stock traded down to 77, you’d get your 100 shares — but if it then traded down to 74, a sell order would then be triggered.

From Gregory Germain: “A friend asked an insurance question I don’t know the answer to, and thought you might. His daughter is about to get her license at 16. He wants to give her an old (but safe) car to drive. The question is, are the parents liable for an accident by the kid, so that they need to get high limits insurance for her? Or can she get her own insurance with lower limits?”

Oh, sure — “a friend.” I’ve heard that one before. Let’s face it: this is your kid, Greg, and you’re scared to death. No? Well, anyway, here’s the answer.

It depends. And varies from state to state. For example, California makes parents liable for the “willful misconduct of a minor which results in injury or death to another person.” (A minor, in California, is any kid under 18, unless you’ve gone through formal procedures to “establish their emancipation” at an earlier age. Needless to say, I didn’t know any of this; I asked a knowledgeable lawyer.) But when it comes to auto accidents, a parent can also be held liable for any negligent act of the child — as can the person who signed the child’s driver’s license application.

The good news, in California, is that you could only be held liable for the statutory minimums out there — $15,000 per person up to a maximum of $30,000, and $5,000 of property damage — even if your daughter maimed the entire high school water ballet club. (The bad news is that most of the money people pay for injury auto insurance in California goes to fighting over things like this, and fraud, rather than to helping you or your daughter if you’ve been injured.)

Ah, but you’re not from California? Me, neither. Unfortunately, you’ll need to talk to a good insurance agent or, if need be, a knowledgeable attorney. Sorry. There’s no one-size-fits-all.



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