Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

The danger of 'buy low, sell high' when a share is crashing
Dineo_T
Contributor
Read more blogs in

market-crash.jpg

Whenever we see market darlings fall on the JSE, the number one question I get is: “should we buy it now?”

 

Of course, buy low, sell high wisdom tells us that the best time to buy a share is when the price is low. That way, you’ll make a killing the moment it rebounds.

 

But what if it doesn’t rebound? For me, investing is not a gambling game. Neither is trading. And so, if you don’t have a particular indication for ‘buy’ apart from simply “but it’s falling” then you’re just gambling and not making an informed decision.

 

I have a checklist of questions one should consider before buying a share that’s falling at an alarming speed.

  • Do you know why the share is falling?
  • What is the company saying or doing in response to the rapid share price decline?
  • Is there stock falling because of an internal issue or is it something management has no control over (external).
  • Have regulatory bodies said anything that may impact the share price further?

This list is by no means exhaustive, but these are factors to consider before jumping into a stock whose share price has fallen. Don’t jump into a share because ‘everyone is doing it’. Gather enough information on what exactly has gone wrong and how it can be fixed, if at all. At the very least you’ll know that you’re making an informed decision.

 

I know losing out on the rise of what people consider a great stock is difficult to digest. When presented with an opportunity to finally buy it at a very low price – we shouldn’t charge in blindly. If the share recovers, you’ll have time to get it.

 

New to the world of investing? Follow our series on Financial Markets:

Financial Markets For Beginners || Episode 1: Defining Financial Markets

Financial Markets For Beginners || Episode 2: A Look At The Equities Market

Financial Markets For Beginners || Episode 3: Unpacking The Commodities Market

Financial Markets For Beginners || Episode 4: Navigating The Forex Market

Financial Markets For Beginners || Episode 5: Demystifying Derivatives

Read more blogs in
7 Comments
Mr_Money
Regular Contributor

SNH :) 

Mr_Money
Regular Contributor

The saying goes in invesing  "never catch falling knives"

partridge1
Regular Contributor

Another possible thought re decision making - for what its worth. Share falls. no news  around this - but there is an ongoing isue or a  "problem that won't go away" - ask:1. Why is there no solution?

2. And if there is none stay away. 

Trader_Lance
New Contributor

catching falling knives, meh...

morapelinthethe
Frequent Visitor

The way I see it, we can still take a gamble if we diversify our holdings. Buy more than one fallen stock. The reserach is still good however, you might miss out on the opportunity of when the share rebounds because you spent time researching. I would assume that only a small portion of those stocks won't rebound. However, this would need to be done baring the transaction costs in mind. I'm farely new at this and my thinking might be a bit misguided. Tell me what you think

meerabgraves
New Member

Uptomods is the best place to download games and apps MOD APK for Android. With a huge selection of MODs, you can find the perfect game or app for your needs. All of our MODs are safe and 100% free to download.

Looking for a new game to play? Check out Uptomods! We have a wide selection of MODs for the latest and greatest games. Whether you're looking for a new endless runner or an action-packed shooter, we've got you covered.

Not sure what a MOD is? No problem! We have extensive documentation on each of our MODs, so you can find out exactly what they do before downloading. And if you ever have any questions, our friendly support staff is always happy to help.

So what are you waiting for? Come check us out today and see what all the hype is about!