I often hear people reluctant to add to a stock because it had been lower in the past. It’s amazing how often I hear people say that they are “waiting for a better value point”, “waiting for a pull-back”, “waiting to buy it lower” etc. In the Knowledgebase I used the following example (I didn’t use the actual stock symbol to keep it general and useful indefinitely):
I recently added to my XXX even though it had run up considerably from my initial purchases. I had initially bought at $16, but I added a lot more at $22. Should I have hesitated because it had been cheaper a few months ago? Should I have berated myself because I didn’t buy more then? And maybe decided to wait and see if it would sell off so I could get some cheap? No way! Its last five quarterly earnings were (in cents), 13, 22, 28, 32, and recently announced, 46! They are growing trailing earnings by over 100% and have a trailing PE of 15.6. I’m buying them at the price they are available NOW.
Well this was three months ago and the stock, of course, was INBK. I added a lot to my position at $22 (as I noted), then more at $23.75 and $24.00 in spite of the fact that it had shot up from $17. Who would have dreamt that it would now be at $36, only three months later? That’s why I add to winners and get out of UBNT type situations, and reinvest the proceeds. Oh, I’ll take a bargain on a winning company if I get it, as I did on BOFI some months ago, and on SWKS recently, but I don’t wait around looking for stocks to go down so I can buy them. I started buying ABMD five weeks ago at $65 and I continued buying even up to $89 after it shot up after earnings. It’s now at $95.70.
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