What would be threshold you sell to cut losses? My QS stocks gone 20% low😬
oh Quantumscape Corp haha - thats a long term hold for me - but i didnt buy at the top >.<.
its not a good idea to buy stocks that run up in general
I know, but got tempted by the release of solid state battery success backed by VW. I still think it has potential, but painful to see it tank
Guess you are new to trading. Let us know what you decide to do or not do
Yes I am. My gut feeling is to hold onto it because of its potential and VW backing. Wonder if 20% loss is too much to sit on at the same time. That’s the dilemma.
the concept of cutting losses is just wrong imo, you don’t cut losses you cut companies in which you don’t believe in their future ability to generate earnings, whether they are up or down should not matter.
I’ve sold many at a loss and then had the stock run up in the coming weeks.
Hard one to say though - it is your choice at the end of the day.
You just have to go with your gut feeling in the moment. Rightly or wrongly.
I don’t see why that’s a dilemma . I have sat on 50% down stocks.
You think the price still go down more and ultimately the company will go bust ?
you need to decide how much risk tolerance you have.
In my own case, I continued to believe my holding that dropped 70% was a solid pick, so I just bought more and averaged the price down. then when the price began to correct later, I locked in profits of almost 20% for my portfolio from that 1 holding.
But I have cut others at 1-3% profits because I couldn’t see anymore upwards potential for that stock for a while and would rather have my funds elsewhere instead of tied up in a losing position.
One theory is 7-8% down you should sell. The idea being capital preservation is key and to stop yourself losing money bail early and get into something else.
Doesn’t that article not almost contradict itself towards the end?
" But the market always recovers."
I guess its slightly different if you buy into a fund or an individual stock. I rarely trade stocks, but when I do, I’m a long term buy/hold.
Also if you take their stock example - Intuitive Surgical, it has recovered and more.
Plenty of stocks never recover. Expecially the leaders of the day or the bkue chip stocks.
A stop keeps you in the game and protects your capital, averaging down works until it doesn’t, then you loose it all…
Yes averaging down can have the impact of over exposing your position.
Good point. Yeah it’s just one strategy which is debatable if its the best.
Annnnd if you had sold out at a 7% loss originally, you could have bought back 5 times the amount…
sure… except the drop was as soon as the market opened. I’m sure you have magical touch to catch the split second that only 7% went down though
telling people when to get out, regardless of how the market acted is pretty irresponsible.
My position size wasn’t drastic before the crash and after the drop I was already buying 4x+ the shares I could with my money before, so I didn’t need to get out to buy back in lower. remember, I didn’t lose any money, the value just went down and I averaged it back into a profitable position.
I knew the company I was invested in. so my choice was the correct one according to my risk tolerance.
Thanks for the useful comments and insight everyone. I am learning a lot from you guys.
Another consideration is the proportion of your total portfolio that this particular stock is. If it’s a small proportion, then you can afford to give it more time.
I mean…a stop loss, thats its whole purpose to get you out before a person can react…
It all sounds great except your a private investor, we dont know diddly about a company. All we know is exactly the same info that is easily available to everyone.
A 70% drop…just as easy could have been multiple events happening in the company that private investors have 0 chance of knowing and you would only find out that the business case had changed 3 weeks later after you’ve sunk your cash and found out the news item that sent it crashing…
Yes of course you’ll get away with it from time to time. And yes of course you had lost that money at that stage, its a really dangerous way to think that just because you haven’t sold you haven’t lost money, its not true, you’re just hoping the share price comes back.
Well, we’re public investors if you want to be pedantic, not private.