Furore
2022-10-24

Buying winners and selling losers may not be the best approach although it may sound like a good piece of advice. Worse so, if following this blindly by selling whatever is dropping and buying whatever is rising.

Whatever goes up will come down, but whatever goes down may not have a chance to go up again. Many market leaders in their time has crashed into bankruptcy or never resurfaced after their share prices went down.

That said, buying winners may not always be the best course of action and selling losers would  seem to be a better idea. But as prices go down, it could be hard to ascertain that this is a loser, and not a victim of economic conditions. Selling them instead of doing DCA may end up with losses which one may regret later.

I would say, the best way is to do your own research and decide for yourself (hopefully the right decisions) whether to hold and DCA or to sell them. 

In the case of Nvidia, I decided to hold on to Nvidia and to do DCA even after the bad news on the restrictions imposed. As I'm not a day trader or someone who trades frequently, I am afraid may miss the rebound after I sell it, and instead of taking advantage of the downtrend by buying it back cheaper, I might end up with actual losses. Part of the reason I've decided to hang on is because Nvidia is reported to be the market leader in the AI chip industry and I foresee AI to be the future as technology advances. 

Based on my past trading experience, I feel that if an investor wishes to make a sure profit from his investment on the long term, the surest way is to go for low risk investing but with lower returns, such as REITs. REITs are required to distribute at least 90% of their profits as dividends, so it'll be harder to lose on a REIT investment in the long term, unless one buys a REIT with a small market cap or one denominated in foreign currencies.

Before making any investments, one should always read up and research on the company, industry as well as their future prospects to minimise any risks of losing one's hard earned money. 

Selling the losers and buying the winners (to me) is just one of the styles of investing that is supposed to increase the chances of profitability. For me, I rather stick to DCA and time in market vs timing the market.

Sell the Losers & Buy the Winners: Boon or Bane?
Based on historical data, buying a falling stock at discount or selling a strong-performed stock has seldom been a consistently successful strategy, but it has been a common mistake.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • LeilaLynch
    2022-10-25
    LeilaLynch
    growth stocks like NVDA will likely outperform over next 4 months. Even though it's growth we most worry about. Economically. Markets are ahead of us and anticipate recovery sooner.
  • CrystalRose
    2022-10-25
    CrystalRose
    NVDA A lot of higher highs…looking good. I keep reloading around 119/120 and selling at 125 to 127 pops.
  • Sonoma
    2022-10-25
    Sonoma
    thank you for sharing
  • CatherineGunter
    2022-10-25
    CatherineGunter
    Semi conductors nowhere near bottoming. Will underperform small caps. Why? They were later in the rotation by Smart Money and have to be taken down further. Even though, generally, we rally soon.
  • WingCheong
    2022-10-27
    WingCheong
    Thanks for sharing.
  • 皮卡爱苹果
    2022-10-25
    皮卡爱苹果
    ok
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