Stocks falling by 50%, are they cheap?
Since I first started dealing with stocks, the investors around me have been buying stocks with the concept that the lower the stock price falls, the cheaper it becomes. They say that when the stock price drops significantly, it's actually a big sale! It's time to shop...
But this strategy doesn't work for every stock, and it can even be a risky move for most people.
Because the percentage of decrease and increase are not directly proportional, a 50% decrease requires a 100% increase to break even. Buying a stock at RM1 that falls to RM 0.5 is only a 50% decrease, but going from RM 0.5 to RM 1 requires a 100% increase. If you keep buying into a stock that keeps dropping in price, your wealth will keep shrinking.
Take a look at today's $Sea (SE.US)$ - The parent company of the well-known Shopee in Malaysia, the stock price fell by 28% on performance day today, dropping 89% from its peak, which means it would need about a 900% increase to reach the highest point from this price level.
Many investors consider a 50% drop as cheap, with another potential 50% decline, and then a possibility of another 100% decrease - attached is a chart from my slides for reference, dropping 50% from point A to B, another 50% from point B to C, and a further 56% drop from point C to D.
Stock prices can drop by 80% and still have the potential to drop another 100% from that point, not just remaining at 20%....
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$Sea (SE.US)$ should had buy it when it falls to 89

$Futu Holdings Ltd (FUTU.US)$ 90% of the financial reports have dropped... It seems that there haven't been many significant increases, especially in the case of Futu.

$Sea (SE.US)$ Expected trash stocks since I short at 351.

$Grab Holdings (GRAB.US)$  You folks take it easy, me entry late at end of trading day at 3+ dollars.
Will holding grab without worries since it spare money playing for my side 😜.

$Grab Holdings (GRAB.US)$ Have fun less than 4 dollar now. 6000 employees grab hired.
The more curse n fear in the comments, that the best times for entry at the end of trading day.

$Grab Holdings (GRAB.US)$ there are lot stock price under 1 dollar, wait and chance

$BABA-W (09988.HK)$ what a deal…Charlie Munger and his team of professional analysts determined BABA was cheap at 150…now u can get it at 100!! going to margin debt and go all in here!