Do not automatically sell the shares that have risen in price, while holding on to those that have fallen hoping to come out even. Equally silly is the automatic selling of losers and holding onto winners.
These two strategies don’t make sense because they use the current movement of the share price as an indicator of the company’s fundamental value.
We know that recent share price movements often have little to do with the future prospects of a company.
A falling price is only a tragedy if you sell at the lower price. If the prospects for the firm remain good then a fall presents a wonderful opportunity to buy at bargain prices.
To make decent profits as an investor you need to train your mind to accept that when a good share has fallen 30 percent after purchase you buy more because it is even more of a bargain than you originally thought.
Just because everyone else is abandoning the company, it does..... To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
Prof. Glen Arnold
I'm a full-time investor running my portfolio from peaceful Leicestershire countryside. I also happen to be UK´s best selling investment book author and a Financial Times Best selling author.
Originally, I wrote all my ideas out in full on this website. Now that ADVFN publish them they are entitled to display the full version for six months – you can see them here. Thus can I only post the first few paragraphs here for anything younger than six months.
I write 2 to 3 newsletters per week - investing is about making the right decisions, not many decisions.