VIDEO ON MSN MONEY
This is faulty logic? This is the basis for those of use who beat the market by a small margin,
I can understand if the writer means it's faulty to keep stocks that continue to drop and stubbornly keep them because your research says they're good.
Personally, if a stock falls 25% for normal reasons (no tsunami's, strikes, forest fires near 50% of its restaurants, etc.) below the price at which I bought it, I sell. That keeps me from assuming I'm infallible.
That works most of the time, but one of last ones for which I did that was Citigroup. Back around 2010-11 I stated seven strong reasons why Citi was worth buying. It bought at $45, it fell 25%, so I sold. Now it's $47+. Fortunately, I replaced it with Bank of America and did even better than I would have with Citi.
This is a lame article...............There is much more to it than what is mentioned.
I traded no load no fee mutual funds like stocks for a few years on the dips and improved my returns in the double digits and watched stocks and learned a few ins and outs before investing in them. Now I kept my funds and trade a small portion of my portfolio in stocks to off set the market direction. Individual stock have a much higher loss/return percentage which I always use a trailing stop loss which will be calculated on the volatility of the investment. Reducing loss from a bad investment and locking in gains from a good one. My risk is managed at that point. No matter what its a good Idea to participate in your financial future.......monitor daily and look for the next entry point. Happy trading.
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