Also, let’s say we invest in 25 stocks. No one can know that the company you invest 1% would become 15% of your portfolio while the company you invest 5% of your portfolio will not budge. Also, your multi-bagger stock could be a company that was being sold at 50 p/e at the time of purchase rather than a low p/e stock. All one can do is try to be rational by buying when the opportunity arises in the form of a market correction or a correction n that particular stock or some capacity expansion that is ignored by the market.
While it would be good to have all stock purchases at market lows, this is harder than averaging down on a good company! This way I am not missing out on some growth. A good example is 3M. It has always been an expensive stock. We would miss out on say 200% return because we are going after 1000% returns which are rarer.
In the end, I guess each investor has their own style of investing. As long as it is as rational as possible, we should be fine!
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