$Palantir (PLTR.US)$ too many comments that they will add if...
$Palantir(PLTR.US$ too many comments that they will add if it dips. Add if this starts ripping - the stock has to prove it will go up before putting more money into it. Not saying adding on any dip is a bad idea as we're at bottom. But add to the winners to be a successful trader.
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OLA-DB : How do we know this is the bottom?
harry buffett : so have u got ur 1 billion?![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Revelation 6 : Makes sense.
Mike Hunt : With all due respect, a successful trader realizes that holding a stock as it drops in value represents a loss just like not holding a stock as it rises does. I’m always baffled by the recommendation of when prices are dropping that you should hold and that you only lose money if you sell. If you consider not taking advantage of potential gains as being a loss than the truth is when a stock is in a downtrend and crashing you only lose money if you don’t sell. Here’s an easy example to demonstrate it. You start with 1000 shares that are one dollar each and as the stock is falling you sell after 10% loss at $.90 per share and you have $900 cash. When the price drops all the way to $.60 a share that $900 will purchase 1500 shares. When the price of the stock recovers to one dollar your portfolio is now worth $1500 instead of the $1000 for the person who held on the way down and back on the way up. Even when you calculate capital gains at the highest short term rate of 40% you still end up way ahead and it’s important to note that doing this is not what the “wash rule” relates to. The truth is that any time you sell and you re-purchase at a lower price you realize owning more shares. Those additional shares translate into additional dollars when the share price rises.
Mike Hunt : 2) This is essentially poor man shorting. People think you must buy low and then sell high to make money and they ignore 50% of the potential gains which are in the other direction. Sell high first AND THEN buy low creates gains just the same. But because retail investors only think in the long terms they don’t realize that holding a stock as it drops is taking a loss. They get really anxious about selling and then maybe the stock goes up which is not owning a stock as it rises but they don’t see that holding the stock as it drops is just as bad. Buying dips and cost averaging down are terrible investing strategies considering the alternative. Mathematics simply suggest that if you sell in a downtrend you realize gains. You can even increase your gains as illustrated in the 1000 share example if you employ a put buying strategy as it falls as well. Doing that yields even more than the 1500 shares in the previous example. So the secret is to know when the reversal is happening because the word dip implies coming back up. But what people called buying on the dip is just buying on a downtrend.
Mike Hunt : 3) I wasn’t involved in the Kodak buying fiasco but I helped a friend who was by directing him to sell immediately in that crazy July 2020 day and he was lucky to get $32 and he paid $56. But by buying puts with that $32 as it continued to trend down all the way to seven dollars, he actually ended up with larger gains then had it just stayed up at $62. So I’m not sure why the conventional wisdom during a crash is to not panic sell, when that’s exactly the move to take to minimize losses and maximize gains. And the thing that causes people to not employ the strategy is their fear that if they sell instead of dropping it will rise. And yet they have no problem with holding the stock as it drops in price. And they’re both equally bad. I made a recent post that outlines why I see the trend changing for this stock. The signs are there before the price movement if you know what to look for. This is yet Another area that people lose potential gains by waiting for certain resistance to be broken, price points to be hit blah blah blah. You can see the swing happening before it’s reflected in the price. I went long and large today on PLTR.
maddhatter Mike Hunt : Overthinking is not good. Streamline and simplify.
Mike Hunt maddhatter : Real simple. I don’t hold stocks in a down trend.
maddhatter Mike Hunt : That’s important. People say average down but talk about stop losses. The two are mutually exclusive concepts.
Mike Hunt maddhatter : I’m only as long a term investor as an uptrend lasts. Generally 4-6 weeks and when a down trend presents itself, I flip and position myself to profit on the decline. Most investors only understand going long and that ignores half the gains available in the market. I was long on PLTR until beginning of November. I liquidated and bought puts. I sold puts yesterday and opened a long position today
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