"MY STOCK DROPPED 20%" 😱 (what to do) #Best Education Page #Online Earning

okay so in this video today we're going

to be talking about something that

pretty much every investor is going to

experience if you're a stock picker out

there you've probably experienced this

and I want you guys to be honest drop me

a comment down below and let me know

what your experience was with this

exactly what we're going to talk about

today and if you're new to the stock

market if you are just beginning to

explore individual stock ownership I get

ready to experience this and if you plan

for it hopefully you can make better

decisions but wh
at we're going to talk

about today is what to do when your

stock crashes and by crash we're talking

about a drop of 20% or more so you buy a

particular stock and then that stock

goes down massively we're talking like

20% or more what should you do when that

happens

and basically what happens or why this

happens is when people buy what people

call a falling knife I pretty much

everybody out there has gotten caught up

in these personally I've been caught up

in General Electric that's one of the

stocks I'm investing in there has been

absolutely a falling knife and a thorn

in my side recently I've begun investing

in JD common other stock that's been

hitting 52 week lows week after week and

it's been another stock that has gone

down massively from where I purchased it

at but if you guys didn't see my video

on JD comm make sure you guys check that

one out because we talked about how I'm

building into a larger position and

leaving myself room to lower my cost

basis and accumulate more shares at a

lower and lower price so that is the

strategy that I follow anytime I'm

moving into a particular investment that

is hitting 52-week lows and my personal

investing strategy is I like to invest

in those battered companies not

companies hitting 52-week highs but

anyways that is the situation that is

where you are at today you've bought a

stock you're down massively what are

your options number one like I just

discussed the option I always leave

myself is the ability to average down

and one of my cardinal rules for myself

is never to go all-in on an investment

any time I begin investing in a stock I

always set a goal as far as how much I

want this company to carry weight in my

fork

basically do I want this to be 10% 20% a

large position a minority position and I

have a general idea of how much money I

want to have invested in that stock and

then what I'll do is I will buy it in

chunks typically it's about a 20% with

JD comm I invested initially three

thousand dollars in this company of my

eventual $10,000 position so that was a

little bit heftier at 30 percent but I

always leave myself wiggle room to be

able to average down and lower my cost

basis when I'm investing so I would

never personally go out there and invest

all of my money into a stock let's say I

want to only $10,000 worth of JD comm I

would never just dump $10,000 into that

stock because of the fact that once you

do that you cannot average down unless

you're going to put more money into that

stock than you originally planned on

which is a poor strategy because then

that stock is going to carry too much

weight in your portfolio so what I do is

I set an idea of how much money I want

to have invested in that stock and then

I build a meaningful position over time

by dollar cost averaging and essentially

allowing myself to lower my cost basis

so if you've invested in the company and

the stock price has fallen one option

you have is to average down assuming you

haven't put all the money that you're

planning on investing in that stock

already into shares of that company

number two the second thing you can do

is take a look at the market sentiment

which is the overall attitude or

feelings of investors and you can

determine whether or not market

sentiment has anything to do with why

that stock has crashed so let's take JD

comm for example this is a stock that is

totally getting battered right now

because of the broad market correction

and the market sentiment right now we

are seeing a bear market with these

Chinese stocks a lot of them are down 20

plus % JD calm is down almost 50% from

their high of 2018 it is no brainer a

bear market but what you look at is the

fact that right now the sentiment

towards the Chinese market is very

bearish because of the low investor

confidence primarily surrounding you

know these trade war fears and the shaky

ground that they're on right now so that

can

a way for you to understand you know why

is this stock experiencing a crash or a

correction oftentimes it's because it's

a broad market correction and all of the

stocks are being affected as a result if

you're noticing that the market is

soaring and your stock is crashing

that's gonna be an indicator to you that

there's something else going on and you

have to you know begin to peel back the

layers of this onion to understand okay

what is going on with this particular

stock the third thing you can do if your

stock experience is a crash it's

something you should have done already

but if you didn't do it study the

company fundamentals understand what is

going on with this company the

fundamentals are gonna tell you the

health of this companies this company in

good financial health are they in

declining health or are they in poor

health and if you see a change in the

balance sheet or a change in the

fundamentals that right there can be a

clear indicator to you that you know I

don't want to be invested in this

company anymore so I always look at

things like the debt of this company is

debt on the rise is debt flat is that

declining I look at revenue I look at

growth of revenue you know I look at the

asset to debt ratio all these different

things and if that picture begins to

change and that financial health of that

company begins to change then I might

decide you know what I made a mistake

here this is not a company I would want

to invest in this doesn't meet my

criteria as a fundamental investor I'm

gonna sell and just basically recognize

my loss and one thing a lot of people

don't know is that you can use capital

losses to offset capital gains so there

are some situations where it might make

sense to just take your loss cut a loss

and you know use that to offset some

capital gains in the future but I see

that as a worst case scenario and

typically you're not going to see

fundamental changes or changes on the

balance sheet or these financial

documents overnight if you did your

research you should be able to see the

trend of this company you know are they

in growth mode are they stagnant is the

growth declining so you should have a

general idea of what's going on with

this company before you begin investing

but if you never looked at the financial

documents it is definitely time to if

you're seeing a crash taking place

especially if it's not a broad market

correct

that's an indicator that something else

is going on number four the fourth thing

that you can do which is often the best

option that is just to stay the course

if you liked this company early on the

fact that the prices Jean should have

nothing to do with your feelings towards

this stock and you should also remind

yourself here that stocks are a

long-term investment in the short term

the prices can change they can be very

erratic and you know in especially

looking at you know six months to a year

or even five years investors like Warren

Buffett recommend investing for five

years or longer anything less than that

is basically speculation you have no

idea what's gonna happen with that price

and so oftentimes the best option is

just to stay the course so a couple of

reasons why you may see a crash take

place with a stock it could be the fact

that company had weak earnings or they

fell short of expectations an analyst

has downgraded that stock there's a

broad market correction taking place in

the case of JD calm the CEO was arrested

there are so many reasons why a stock

can experience a crash and you really

want to identify why is it that this

crash has taken place but oftentimes

staying the course is the best option if

you like the company to begin with

hopefully your opinion has not changed

just because that price has dropped

number five the fifth option as we

mentioned earlier is just to cut your

losses you're going to use that loss to

offset your future capital gains and

there would be a couple reasons why this

would happen or why you would do this

number one you did not do your research

you didn't study the company

fundamentals and so once you finally you

know peel back the layers of that onion

you were like you know what I don't want

to be investing in this company you know

this is the Titanic I'm done I want to

cut my losses and you're going to use

this as a learning experience number two

you have no idea what you bought you

don't even know a fundamental analysis

is your brand new to the stock market

and you just pick the random stock and

and now you've experienced the crash and

that's a very dangerous situation to be

in because you have no idea what you

bought you have no idea what's going on

with this stock and so you're clueless

you have no input as to what's going on

with that stock and you really can't

make an informed decision and to that I

would say you've got to kind of learn

what

before you begin investing in individual

stocks or like I said maybe the

management has changed or fundamentals

have changed something major has

happened within that company and you no

longer want to be riding that boat that

maybe another time when you decide to

cut your losses and then if you do

decide to cut your losses one thing you

might want to consider doing is to just

invest in index funds maybe individual

stock picking is not for you if you

decided to invest in a company without

doing your research or you really don't

even know how to research individual

stocks maybe the better option is just

to invest in index funds and rather than

trying to beat the market by picking

stocks you just hold the entire market

and hold the broad market you know

looking at data from mutual funds and

hedge funds we know that most

professional stock pickers do not beat

the market most people aren't going to

beat the market and so oftentimes the

best strategy is just to own the entire

market rather than being an individual

stock picker so always consider that

option in the back of your mind

personally I invest half of my money in

individual stocks the other half I put

it in index funds and that is my comfort

for investing that is my comfort level

that is my strategy I like to have half

of my money in index funds half an

individual stocks and right now because

I do have you know JD and Alibaba and my

portfolio and Facebook you know my index

funds are totally outperforming my

individual stocks so always consider

that as an option is to invest in index

funds rather than being a stock picker

but anyways guys that's gonna wrap up

this video I do have a companion article

that goes along with this over on the

investing simple blog it's called what

to do before during and after a stock

market crash so not when an individual

stock crashes when the whole market

crashes so if you guys want to check

that out the link for that article is

down in the description below I would

really appreciate it there's a lot of

really good articles over there on the

investing simple blog but thank you guys

so much for watching this video leave me

a comment with what stock you held that

experience the 20% drop and you know let

us know what you decided to do as a

result but anyways guys that's going to

wrap up this video and I will see you in

the next one

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