If you are into investing with shares, you would have came across or learned about the above three phrases:
– Buy And Hold
– Buy And Sell
– Sell And Take Loss
I am not a Professional Stock Investor and I have not really made Thousands out from my investments. But I am starting to understand the significance of the above three phrases through my personal in a negative manner and I wish to share what I know about them with this post.
If you are just starting to go into shares, you may wish to take note of them and I hope this can be useful to you!
1. Sell And Take Loss
You can have a good laugh at this. When I first got into shares in 2008, all I knew was Demand vs Supply and the impact of Inflation that will drive up the share prices. These are the two schools of knowledge that I apply to buying of my shares.
So I bought into a Stock that’s around $0.25 for 10 lots (10,000 shares). That’s a total of $2,500 not inclusive of the charges. The economy did not turn well for this company and the shares started to go downhill. And there’s no sign of it going up again.
When the share prices dropped by the 10 – 15% range. My friends recommended me to sell them and take loss. Being a sore loser by then, I did not give in and told them off that with time and Inflation, the share price will naturally go up!
Long story short, that company’s overall business did not improve. Shares dropped to the current range of $0.025. My current loss is at $2,000+ range. I am still holding onto it, because I do not need the money (which I may still be silly) and really hoping that the situation will have a turnaround (another silly thinking) and I can sell them off to minimize the loss.
Lessons To Learn From This:
- There’s no winning stocks every time. Shares go up and down depending mostly on the economy and the management behind the company and not just because of demand and supply and inflation.
- If your stock buy is experiencing a loss and there’s no sign of it going up again because of many factors like the annual reports have been bad – learn to sell and take loss. It’s painful but you can take this money and invest in other shares that will give you better returns and cover your initial loss.
- Set a benchmark for your stop losses. Some people recommend a loss of 10% to the maximum of 20%. Once you have this, follow through and apply to your investments.