(08-12-2023, 07:34 AM)p1acebo Wrote: Novice Leong still asking peepur to buy BABA again? ![Laughing Laughing](https://sgtalk.net/images/smilies/Animated/laughing_s.gif)
What is wrong with his technique?
So long as he consider a company good and cheap based on value investing he buys and average down.
What is wrong with this strategy?
1. Good companies can turn rotten. Look at Motorola and Nokia...they almost never go back to old glory. They can face competition and burn up their cash fighting the competition
2 Even if a company is good its stock price can go very far down.....half or one third before turning around. Look at the FB collapse then rebound. You have to always prepare for downside which is unavoidable.
Both 1&2 cannot be determined with any certainty. Usually when a stock is cheap it is because there is negative momentum in the business hence likely to go down in the near term.
How to overcome the above problems.
1. Diversify to 5-10 stocks hold through thick and thin. Experienced stock pickers have a certain hit rate. ...and never 100%.
2. Buy tech index etf not individual stocks.
3. You need to consider worse case like China attack Taiwan or geo political tensions that drive the Western powers to sink the Chinese economybover long term. While these are nit predictable you need to consider the losses you can suffer if such an event occurs and your course of action.
Master Leong favorite phrase "oh no oh no..." he seems unprepared.