Market Strategy Part II
Continuing with the investment strategy I am hoping to help you learn and understand. Normally, I would have made the next investment in Facebook (the stock I had chosen to follow for this example, on or around the !
of "arch, but instead, I chose to hold off seeing if the price would drop. If you remember the previous installment, the price basically increased and now I have a drop in the price to show you how it works. #fter waiting the price has fallen to $%&.'% per share from $&&.) a share in February representing a $*+.* decrease or an *%.! drop in value. -his is when this all gets very exciting.#s I said several times in the previous article, "/-I/N #--#C01 -/ 2/34 "/N2 5I66 7I66 2/3 842 -I" IN -0 "#47-9 2es, you have taken a loss if you panic because the price has fallen and you sell now. Currently, the loss is only on paper: you haven;t actually reali<ed the loss. -o paraphrase 1onald -rump, you make money in a bad market=yes, you do make money in a good market but not as much and as fast as you will in a bad market. 0opefully, with this downturn and the continuation of this example, you will see why.>tocks do go up and down because of cyclical reasons, business missteps, and mostly due to emotions such as greed and fear. 0owever, if you look at the stock over the years since its inception, with all of the dips and peaks you will notice that the overall trend is that the price is increasing at approximately ?. 5hen the market or price goes down, here is the opportunity to increase that rate dramatically. -his is possible because you are able to pick up more shares at a bargain price which brings your average price per share down. #nother thing to remember is that in the stock market, what really is important is the number of shares. "ore shares you have then higher your dividend payments and the more votes you gain in the company./ne of the ma@or reasons I like this method of investing is that it gives you the opportunity to average out your expenses. It is incredibly difficult to pinpoint lows and highs. 2ou can decipher cyclical changes in the company you are following: with most businesses there are times during the year when the price is high and low. 0owever, you never know for sure how low or how high: if you could, you don;t need to listen to this method. 5ith this method, instead of saving up a bundle and dropping it all on one transaction hoping it is low which is a lot like playing the lottery, you invest portions of it over time while getting a feel for the stock you are investing in and though you may not get the exact bottom price, you will be pretty close or close enough to drag your C/>- down.6et;s get back to the example. In our first strategy example we had been investing a constant $*++.++ each month. #s of the last transaction we had made, we had %.A&' shares valued at $A%.!' which we had purchased for $A++.++. 5ith the current price our shares are now worth $A+).%?. 5e are still showing a gain of $).%? or a *.%A gain. #B#IN, -0 -0INB -/ 4""4 I> -0#- -0I> I> /N62 # 6/>- IN 8#63 /N D#D4 . 5e are trying to invest and build up our value right now. 2es, it would be a concern if we were retiring and wanted to cash in our stock soon, 3- 5 #4N;-.