Feb
29
Wait for the 2nd Day?
February 29, 2008 | Comments Off
I am more of a value investor. I look for companies who have good growth potential but for some reason have been neglected by the market. I do this on a long term horizon as well as a medium term one.
When there is a bad day in the market, I tend to feel the urge to grab the values I was looking for. More often than not I have made sub-optimal decisions: I have bought too early, too high and have diminished my earnings potential. Maybe it is just the voices on my head, more often than not I have seen a second bad day after a first mildly bad day.
I define a :
- mildly bad day as one where the Dow goes down around 100 points.
- bad day one that goes down around 200.
- terrible one, when it goes down by more than 300.
I am beginning to think that after a mildly bad day there is usually a worse one after it. If the first day is a mildly bad day, I should wait on the sidelines and wait for the second day of slump. If the second day it bounces back, well, I didn’t lost too much of an opportunity anyway. But if the second day goes really down, I stand for a better value – assuming there was any value on the stock on the first place, of course.
I know this opinion is unscientific. Do you have the same feeling, or am I just crazy, biased, hurt, or all of the above?
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