All right, I'll give my portfolio details when the market opens again. But this week just crippled my stock position. I'm down by 20%!
I'm tempted to cut my losses and sell, but I'm sticking to my plan of buying and holding. $700B did not work?
Ok, I agree with Bush, the cure was injected to the system, the body just need a couple of weeks, months or even quarters to heal.
1. DO NOT PANIC SELL
2. Cut back on luxury expenses to save cash
3. Hold that cash until the first ray of light show up.
4. PANIC BUY!
Last February 2008, MEG currently is swinging at 2.10 - 2.45, I tried to buy at 2.08, unfortunately I was not able to. The next day MEG rallied at an average of 0.1 per trading day.
Come April 2008, MEG price went back to 2.08, that looked like a bargain to me, and I started buying in 2000 share increments per week. MEG price, declined consistently to 1.80, 1.60, 1.50, 1.40 ... until 1.14.
I steadily bought MEG at 2000 share increments as it went down, since
-MEG paid dividends,
-MEG was a bargain at P/E 8 to10, and I thought that
-MEG will dominate the Mid Level market in the condo business.
But, I was also saving a lot of cash thinking that when it hit 1.00 per share, I'll go ALL-IN on that stock. Thus, when the price hit 1.14, I bought a lot of it and made the average buying price per share @ 1.30. Meg rallied again on the next month and made me a whopping 30% gain.
That's why investors should not PANIC SELL. Just like in Poker, you'll never know until you see the cards.
If you bought 10 shares of ABC stock at PRICE = 10 per share (should be 52 week average of 10)
Thus, 10 shares @ Php 10 = Php 100.
In the next month, the price dropped from 10 per share to 1 per share.
Buy 1000 shares @ Php 1 = 1000
Your average stock price is Php (1000 + 100) / 1010 shares = 1.089 per share.
Now wait till the next BULL comes, price goes back to the average price and there's your X-folds of gain. But the key here, is that to have buffer cash to dig yourself out when you made a wrong stock pick. Just don't put in your kids college fund or rental money.
One more thing. You never really lost money in stocks until you sell at a loss.