RE: Long term hold?29 Jun 2020 13:07
I get your point Learningtrader, but none of us know the short term directional movement of a SP, if we did we'd be making millions. What we do conclude (hopefully) is a "true" share price based upon fundamentals; a value investor buys at a price that represents a good value against it's anticipated real value. In very simple terms this could be current price versus pre-covid price (I appreciate that the reality is much more complex). If I buy at a price today, and let's assume I have invested only half of what I think I could afford to invest, if the price falls you are suggesting I shouldn't invest my other half because I am now "chasing" the price downwards or "chasing my losses". Surely I am merely taking advantage of the downward movement?
I agree, as already stated, that if something has changed the fundamentals e.g. the company has lost a £1m contract that might affect the company value, that it may not be so wise to invest more, but we are assuming that our due dilligence still suggests the real value of the business to be higher than it is today.
This isn't an insult but merely that I'm not sure that you are explaining yourself very well?
If you believe the share to be a good long term hold, as indeed I do, and as such believe the SP is "cheap" right now then why not invest more if the price is falling. Usual caveats applying of course!