Panic And A 50% Stock Return Are Good Friends
Fifty percent returns often present themselves as trouble. They are actually a buying opportunity.
Most investors want a stable portfolio. They want consistent returns with little volatility. But sometimes volatility comes fast. It can cause a stock price to drop by 50% in a few hours or days.
The company’s fundamentals can be as strong as they were days prior. A rumor or fear of an unfavorable short-term financial report can cause investors to dump the stock.
None of that should matter if you understand the company you’re invested in. And if you know its real (intrinsic) stock price and bought 50% below it, you have nothing to fear.
But many investors do fear. Because they overpaid for the stock. That leads them to sell the stock to cut their losses. For long-term investors, this is a buying opportunity.
This is where and how the 50% returns often occur.
Have a good day.
Enjoy your investing.
Mo Hicks
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