Why Two Traditional Strategies Won’t Work

There are two kinds of strategies that many people use when trying to get their lagging stocks to recover:

1. Some people will hold onto their stocks in the hopes that it will get back to the original purchase price.
2. Some people will buy shares of that same stock at a lower price. This might double one’s position.

The first strategy is problematic in that you are expecting the stock to rebound. The problem is that it might take months, if not years, for a stock to actually move back to your purchase price. For instance, if you bought Sears stock a few months ago you might have to spend even more months or years to wait to see that stock move back up in value. This is because Sears continues to fall in value and is not the best-rated choice.

For the second strategy, doubling up your position would be putting in an even greater risk into the stock. There is never a guarantee that the stock will actually move up in value. If anything, the potential losses that come with doubling up would be even greater. Although you could review how a stock is changing over time, you would have to look at long-term trends beyond some of the brief ones that develop over a few days.

Those two strategies are risky, but the strategy you are about to look into will work better. Working with a more detailed and useful plan for recovering your stock’s value is better.