Thread by @YossiGestetner

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.

https://twitter.com/stoolpresidente/status/1357009992411398144

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.