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Stop orders and penny stocks
THE MOTLEY FOOL
Published: October 13, 2026
Q. How do I use a "stop" order? -- G.M., Chesterbrook, Pennsylvania
A. The easiest way to buy or sell some stocks is via a "market" order, which will execute at the best available price -- typically immediately if the market is open. With a "limit" order, you set a maximum price at which you'll buy or a minimum price at which you'll sell.
A "stop" order is one that becomes a market order once a specified price has been reached. It's often used to avoid losing a lot of money if a holding suddenly plunges. For example, if Scruffy's Chicken Shack (ticker: BUKBUK) is trading at $50 per share, you might set a stop order to sell if the shares ever fall to, say, $45. That can protect you, but it might also end up kicking you out of a stock that soon recovers and keeps growing. Worse, if the stock falls overnight and opens at $30, you can lose a lot.
Remember that long-term investors aim to stay invested in promising stocks for years, riding out temporary downturns.
Q. I'm a new investor who's made some money with penny stocks. Can you recommend any? -- G.D., Nolensville, Tennessee
A. Count your blessings, because penny stocks (those trading for less than around $5 per share) are often tied to small and unprofitable companies. They're notoriously volatile and risky, and many people have lost their shirts on them.
You needn't favor low-priced stocks. It can feel good to own 2,000 shares of a $2 stock, but it may soon become a $1 stock. You might do better with 100 shares of an attractive $40 stock (or 10 shares of a $400 stock).
Fool's School
What If Interest Rates Rise?
Economy watchers often keep an eye out for changes in interest rates, which are influenced by the U.S. Federal Reserve Bank ("the Fed"). At its last meeting in late July, the Federal Open Market Committee (FOMC) made no changes, but a hike is possible at the next meeting in September.
Central banks, including the Fed, adjust interest rates to try to keep inflation in check and the economy humming. When inflation is high, hiking interest rates will make it more costly for businesses (and people) to borrow money, which can slow overall spending. When the economy can use a boost, rates may be lowered to encourage borrowing and investing.
If interest rates are increased, you'll face higher monthly payments when you borrow money, such as for a mortgage or a car loan. That may force some people to settle for less costly homes or cars. Borrowers with adjustable-rate mortgages (ARMs) will likely see their rates increase over time. Anyone expecting a rate hike may want to look into refinancing their mortgage to lock in current lower rates.
Credit card interest rates will rise, too -- and they're already high, with average card rates recently near 24%, per LendingTree in mid-August. (It's always smart to pay down credit card debt as soon as you can.)
On the plus side, rising rates allow those who are saving money to earn more generous yields on their bank accounts, certificates of deposit (CDs), money market accounts and bonds. The prices of existing bonds will likely take a hit, though, as bond buyers will prefer to buy new bonds that have higher interest rates.
Rising interest rates can put a damper on the stock market's performance -- partly because alternatives to stocks, such as bonds, look more attractive with higher interest rates. Also, companies issuing bonds to raise funds will have to pay more interest on those bonds. Companies in certain industries, such as financial services, can profit from rising interest rates.
My Dumbest Investment
Lost 30% Unnecessarily
My most regrettable investment was buying shares of Advanced Micro Devices in 2019. I was excited by its growth potential. But I was new to investing, too, and hadn't yet tested my ability to hold through temporary downturns. I sold my shares at a loss of around 30%, I think. If I'd just held on and done nothing, I'd be up a lot. Thankfully, I've learned from this mistake. -- M.S., online
The Fool responds: Ouch. That was a costly mistake indeed. If you'd bought AMD at the beginning of January 2019 and were still holding at the end of August 2026, you'd be up 2,400%! That's an average annual gain of 52.2%, which would turn a single $10,000 investment into around $250,000.
Remember, though, that just about every stock investor has a story like this, selling a stock way too soon. As you go through your investing life, be sure to sell only for good reasons -- perhaps you need the money, have lost confidence in the company or have found a much more compelling investment. If a stock is down but its growth prospects remain intact, holding on -- for years or even decades -- can be the best move.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Foolish Trivia
Name That Company
I trace my roots back to 1994, when I came to life as a rechargeable battery maker. I'm now the largest seller of fully electric vehicles, having surpassed Tesla. I sold a record 4.6 million vehicles in 2025 (General Motors sold 4.5 million), and my CEO is aiming to make me the world's largest automaker in just five years. I'm involved in automobiles, rail transit, new energy and electronics, with operations in China, Japan, the United States, Canada, Brazil, Hungary and India. I'm a Fortune Global 500 business, with the hope of helping each customer "build your dreams." Who am I?
Last Week's Trivia Answer
I trace my roots back to 1979, when I was founded in a basement and had three half-time employees. Today, relatively few people know my name, but my software serves a wide swath of the healthcare industry. More than 325 million patients have a current electronic record in my database -- which is used by more than 3,400 hospitals. Based in Wisconsin, I'm employee-owned and not publicly traded, and I've grown organically over the years rather than through acquisitions. My founder still runs me, and she's a billionaire now, planning to give away her fortune. Who am I? (Answer: Epic)
The Motley Fool Take
Consider Medtronic
Shares of Medtronic (NYSE: MDT), one of the world's largest medical device makers, have declined by 30% over the past five years. Higher costs, supply chain bottlenecks, quality control issues and competitive pressure in surgical robotics all weighed on its stock.
Although the company may not sell essential services to consumers, its medical devices are necessities in the healthcare sector, so it has a great deal of stability and consistency in its operations. But with Medtronic also launching new products, it has some exciting new growth opportunities ahead. For example, its Hugo robotic-assisted surgery system obtained clearance from the Food and Drug Administration last year for urological surgeries.
In March, Medtronic spun off its diabetes unit to streamline its business. It's also restructuring to expand its higher-margin cardiovascular and neuroscience portfolios and to integrate more AI features into its surgical planning products.
In fiscal 2026 (which ended in April), Medtronic's revenue grew 8.4% year over year to $36.4 billion, marking its strongest top-line growth in 10 years. CEO Geoff Martha has noted, "Together with the investments we're making in our [product] pipeline, Medtronic is well positioned to deliver sustained growth and long-term value."
Best of all, Medtronic pays an attractive dividend, recently yielding 3.1%, and it has upped that payout for 49 years in a row. (The Motley Fool owns shares of and recommends Medtronic.)
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