June 20, 2021

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Peter Lynch - Dealing With a Falling Stock

One of the most frequent questions received from my readers : “The share I bought recently, the price is falling. Should I cut loss or buy more?” My reply will always be : “Why did you buy this share in the first place?”
I think this is the most basic question one have to ask themselves when investing in a particular stock. If you do not know why you buy the share or you have absolutely no sound justification to invest, you are as good as flying blind. Hence, why am I emphasising this now? Because this question will determine whether one should average down / buy more of the same stock where the price is falling. Buying a stock that is trending up is easy - you simply just chase. However, buying a falling stock is truly an art that is very hard to master. Have a look at this video by Peter Lynch. 

Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 10, Page 110
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Last modified on Thursday, 03 June 2021 17:40

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This  information should not and cannot be construed as or relied on and (for  all intents and purposes) does not constitute financial, investment or  any other form of advice. Any investment involves the taking of  substantial risks, including (but not limited to) complete loss of  capital. Every investor has different strategies, risk tolerances and  time frames. You are advised to perform your own independent checks,  research or study; and you should contact a licensed professional before  making any investment decisions.

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