Question

What is a good strategy for buying stocks? What point do you sell off the under-performing assets?

Answer 1

A good strategy for buying stocks is to buy undervalued stocks . The most important strategy behind making profits is by buying stocks at a low price and then sell them at high a price.We should be choosing stocks from sectors which are booming in the current period.

The investors generally hold on to lose making positions hoping that these positions will eventually bounce back, because it happens that when we pick stocks of good companies after a period of slump the stocks generally bounce back to higher levels.But the investor should know when is the right time to not keep holding the stock anymore.

The investor should keep a point , that is 20% of the total investment. If the stock falls below 20% of the amount invested we should not be holding the stock anymore. There is possibility that the stock is expected to fall further down.

If the current news and financials does not make it an attractive buy at current levels, its time to do away with this investment and recognise the losses to avoid sinking further into the losses.