If they reduce the price of hamburgers at McDonald's today I feel terrific. Now I don't go back and think, gee, I paid a little more yesterday. I think I'm going to be buying them cheaper today. Anything you're going to be buying in the future, you want to have get cheaper.
- Warren Buffett
The above quote goes against the principle advocated by the 'technical analysis' based investors who advocate the stop loss theories. Well, if you have fairly correct with the entry price point after a thorough analysis of the company and the reason for the current correction in the market price, you need not worry about further price corrections. Instead, it gives an opportunity to buy the company at a lower price than the 'intrinsic value' as identified by you. It is like buying a dollar for fifty cents.
But before you jump to conclusions, the responsibility lies with the investor to analyse the company and then arrive at the fair value price range. And if you are wrong in any of these two variables, the ground falls apart.
Remember over consuming hamburgers is not good for your health. The same applies to the stocks. Laying all your eggs in the same basket would also backfire. So be judicious on overindulgence knowing the pitfalls.
- Warren Buffett
The above quote goes against the principle advocated by the 'technical analysis' based investors who advocate the stop loss theories. Well, if you have fairly correct with the entry price point after a thorough analysis of the company and the reason for the current correction in the market price, you need not worry about further price corrections. Instead, it gives an opportunity to buy the company at a lower price than the 'intrinsic value' as identified by you. It is like buying a dollar for fifty cents.
But before you jump to conclusions, the responsibility lies with the investor to analyse the company and then arrive at the fair value price range. And if you are wrong in any of these two variables, the ground falls apart.
Remember over consuming hamburgers is not good for your health. The same applies to the stocks. Laying all your eggs in the same basket would also backfire. So be judicious on overindulgence knowing the pitfalls.
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