WHEN SHOULD YOU CUT YOUR LOSSES
Sometimes we all pick a share and we are convinced that we are right and everyone else is wrong when the share price refuses to confirm the value we have placed on the share through our meticulous or sometimes not so meticulous calculations. We buy more of the share at lower levels as we cannot believe how cheap the share is relative to our valuations. So rather then buy a share hitting new highs we concentrate on buying “bargains” at new lows. “The market is wrong” we keep saying as the share moves to new lows and sometimes this might be correct if its a thinly traded share but mostly the market knows something we don’t so if a share fails to show fair price appreciation after some time then rather get out and move into something else. This is not to say you must keep chopping and changing your shares but if a share keeps on falling there is something wrong.