If the Essence Hasn't Changed, You Should Hold
Don't be shaken by the phenomenon (price); focus on the essence (the reason for buying)
"In the end, what counts is buying a good business at a decent price, and then forgetting about it for a long, long, long time. Some people can do it and some people can't."
— Warren Buffett
Every trade must have a reason and a record. And if the reason for buying (the essence) written down at the time of the initial purchase hasn't changed, you should keep holding that stock. Conversely, if you had no plan for averaging down from the start, you shouldn't average down. According to Managing Director Kim Il-gu, in many cases people keep averaging down on the wrong stock until their account is wiped out, and my First Republic investment also maximized losses through wrong averaging down.
Should you average up?
- Veblen Effect
- _z.221230 오를땐 모두가 찬양한다
Should you average down?
Averaging down and impatient profit-taking maximize losses. If, at the moment you decided to buy, you had no plan to average down , that act is, owing to temporary dopamine, nothing but gambling. If you keep winning by averaging down, eventually you're bound to lose the game 51% Probability.
Should you cut losses?
There's no need to react to bad news. As long as it hasn't strayed from the story, selling is wrong
- Why do people sell when prices drop
- _z.230407 인텔이 배당컷을 한다고 팔았다
Topics: investment
Category: Evergreen
Status: Ever/Tree
Up: N Commandments of Stock Investing