I am an optimist. I like to see things from the bright side. They say, everything dark cloud has a silver lining.
More often than not, when I bought a stock it usually dropped initially. If I had used a stop-loss, I would have lost money most of the time. But I am not a trader. I am an investor. This means that before I buy a stock, I do a due diligence on the company. Only when I am completely satisfied that the company is safe, its business model is good and its core business is viable, will I put in the money. Thus I am not worried when the price has a small downward move.
The most important thing to remember when you invest is not to overpay. Everything has a price. When you overpay even for a great company, it is difficult for you to make a profit. So choose your entry point carefully.
Sometime ago, I recommended a buy on EPIC when it was selling at 2.11. The stock did move up to 2.30 plus. Those who chased the stock are probably scolding me for their paper losses.
I had anticipated the stock to move up going by the movements of the share price. It was then rumored that the company would be taken private. Unfortunately, the company denied of such a movement going on. Subsequently, the price of EPIC took a dive and hit below two ringgit.
EPIC is one of my heavy-weighted stocks in my portfolio. I have been accumulating this stock for quite some time. My average price is about RM1.68 per share. It is my intention to add more of this stock to my portfolio. But I won't be chasing it until more positive signals are displayed in my chart. Anyway, my opinion is that the company is a safe bet, and that a privatization will become a realty in the not too distant future.
A drop in the price of a stock may turn out to be a blessing in disguise.