1/ Selling when you are down is THE way to lose money because you have no chance to earn anything back if things rise.
When I am down steep on a stock, I buy more. This brings down my average buy price; losses start to recover sooner and it can turn profitable sooner too.
2/ @stoolpresidente It almost always worked for me.
Example:
I moved into $MJ at $30. Then at $20. Then at $10.50.
My average buy price dropped to $17.00
It crashed to under $9.
Then it rose, and rose and rose. It hit today $23.88.
Losses long recovered. Gains are here too.
3/ Newcomers’ mistakes don’t start with selling when down.
The mistake starts by chasing stocks on the upswing (I did not touch #GME), and another mistake is buying their full hand at the start. I place only 40% of my would-be hand. If it rises, great. If it crashes, I buy more.
4/ “But Yossi. #GME and #AMC won’t rise again.”
Oops. This is another newcomer mistake: Making confident predictions about the direction of securities. Not good. Be humble.
But let me address it anyway. When #KODK popped in August 2020 to $60 I waited for the moment to pounce.
5/ When it crashed, I bought at $16.32 and stuck to my rule of not going in with a full hand no matter how sure I am that a stock will rise. I used the rest $ to but more all the down at $6.80.
It never regained $16.32 but I sold them all it at a 19% gain.
#Investing #Trading
6/ Selling a stock within a year of buying it is taxed as income whereas holding it more than a year has capital gains rates.
From a tax point it is dumb to sell quick, but from a trade perspective a stock that I was down 58% from my initial buy, turned into a 19% profit.
This thread - addressing @stoolpresidente - was posted Feb 3d when $GME was at $92; down from $400+ days earlier. The stock then plunged to under $50 and today it hit $190 in after-hours. So... if you violated the rule of jumping onto a stock that’s wild and still bought at $250,
you would have bought at certain drop levels all the way down to as low as $68. This would lower your average buy price well below the level where the stock was today. You would be up now with a gain of 20%.
“But Yossi, why would anyone think that the stock would recover from >
the recent low of sub-$50?”
Good question but why did you not ask it when $GME was at $250? As far as I am concerned, don’t bother with such stocks in the first place but if you do, prepare limit orders on the way down (and prep sell orders on the way up). cc @stoolpresidente
10/ BTW I bought two “Reddit stocks” but only after they had plunged.
In one, am BH up 183% among the sold shares; up 68% in the shares that I still have.
In the other, I am up 75% in realized gains, and up 22% in the unrealized ones.
I NEVER sell on the way down. Dave did.
No, I don’t have the recipe for great stock market success. But...
Jumping into a stock when it’s midstream upwards (rather than buying when it has a pullback)? Stupid!
Putting all money into the first buy? Stupid!
Selling when you are anyway way down? Stupid!
Dave did all 3.
12/ Yesterday when $GME was in the $250 range, @stoolpresidente decided to jump back into it.
Did so after leaving in early Feb on its way down below $100.
I hope he reads this thread.
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