Do investers ever buy stock then more of the same stock even if it goes down?

Question

is that called chasing it down? Is it a good idea if it has good financials but just dips?

Answer 1

Lots of smart investors do this all the time.

Once you've done your work and believe in your price targets, you should buy more shares when the stock dips. You first check your thesis - has something changed / did I miss something? Often though, dips are due to hype or overreaction.

Answer 2

If you liked the stock enough to buy it at a higher price, and nothing else has materially changed about the company, shouldn't you like it even more at the cheaper price?

As long as the fundamentals are still in place and the market is not clearly trying to tell you something specific to your stock, then by all means buy more to lower your basis.

Just be careful about catching a falling knife. As long as your stock decline is in line with the overall market or sector, and no other red flags exist, go for it. If your position is down 10% on a 3% day for the overall market, something is wrong.

Answer 3

Check out a book call Remenicences of a stock operator. Its about this investor from the 20's. Its very intresting. Fun read and you learn alot.

Good rule of thumb. Look @ the Market the stock is in. If you have done your recearch on a stock and your confident it will go up & If the market is not fluxuating too much, but your stock is going down. Double Your Share!

Answer 4

Yes. But it could go down even more. Lots of tech firms had great financials and look what happened back in the tech bust.

Diversify, don't maket time. You'll lose. Rebalancing forces you to buy low and sell high.

Answer 5

1) Yes.
2) I don't know.
3) Yes.

Answer 6

it depends on the stock, they do sometimes