The Case For And Against Buying More Stock

By | September 21, 2020

During September, the NASDAQ 100 has dropped. And kept dropping. Of the gains since March, September has seen about 10% evaporate. After the selling started, it was too late to sell. If you didn’t, you really should have listened to me earlier when I said cash was king. But I’m not about I told you so’s. I’m about what do we do now.

The answer, if you don’t have cash on the sidelines, is nothing. And I know that is the hardest answer to hear. You’re losing market value by the day and the right thing to do is nothing? Well, let me qualify that: Regardless of whether you are gaining or losing, if a company you hold stock in changes for the worst, you may want to consider selling. Otherwise, everything is the same as when you bought it, ride it out.

If you do have cash, you may be wondering when the right time is to use your cash to buy more stock in your 10 companies. I have heard that September may be the problem because there is really not much news to trade on. It is the last month of the quarter and companies are not reporting this month for the most part. Would late September or early October be good for buying?

If we look at the charts for answers, you can see we have been going up and down since the initial drop this month, indicating some support where we are. But we haven’t broken up or broken down. It’s just kind of steady. Negative news could cause another drop to the next support level. Positive news could send the market up, possibly reaching the peak by the end of October. This doesn’t really give us an answer.

So there really is no answer. If you deploy your cash you could see a loss before the next gain. If you sit on your cash the market could take off again. Chart readers might be able to tell us more. Right now I feel comfortable sitting on my cash for when the market really takes a dive. I’ve made quite a bit this year so it’s really no big deal to do this.

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