6 Volatile Stocks: Sell or Average Down?
I like being influenced by others. Some of my best experiences in life have come under the influence. At the same time, I do not like doing what others tell me to do. That basically sums up my approach to investing.
Each day, I read way more articles than I write. Sometimes 30 to 50 times more. That's a ton of copy to go through. The best articles influence me, but the authors rarely tell me what to do.
Within this context, I define influence as persuading somebody to try something they might not have considered trying before. To view an issue or event from a fresh, unique or slightly different perspective. To consider alternative explanations for why something is or might be. And to use new or reinforced information to help achieve goals and objectives.
From there, I go on to make my own decisions about what to think, whether to tweak or change my views completely and what stocks to buy or sell.
For me, that's the best way for most writer-reader relationships to proceed. It's an idea exchange that, hopefully, the reader can walk away from with something of value.
When I write about buying a stock, liking a stock or not liking one, I hardly expect consensus. It would freak me out if we ever achieved consensus on something as subjective as investing. In particular, buy/sell decisions prompt quite a bit of passion, conviction and difference of opinion.
This is especially the case when we discuss stocks that have lost considerable value. In this situation, investors have to decide whether to sell and take the loss before it has the chance to get bigger or buy more, averaging down the cost basis of your position overall in anticipation of eventual upside.
I recently cut loose part of a losing position in Nokia(NOK) . I wanted to take the loss now before it had the chance to get any bigger.
That does not mean I am no longer optimistic about Nokia's potential to turn things around. I am; however, when I stepped outside of myself I realized that two factors make such an extraordinary comeback improbable.
One, competition in the space, led by Apple(AAPL) is incredibly fierce. And, two, mindshare dictates market share. You cannot beat Apple in terms of marketing prowess and consumer cool, especially when they have solid products to back up their cultural cachet.