If the company is doing the right things and you bought it at a price that made sense, the stock price will rebound, even if it drops. It just might take a while.
I take a look at examples of what I've seen since I started investing in 2008.
- One stock dropped almost 80% of where I bought it. It took about 8 months for that to recover.
- Another stock dropped 20% of where I bought it--THE SAME DAY. Within a year, I sold it for nearly 3X what I paid for it.
- Another stock dropped 65% of where I bought it, within 45 days. A month later, I sold it for over a 50% profit.
- Another stock dropped 13% of where I bought it, within a week. A year and a half later, the stock is almost 80% higher than my "buy" price.
- Another stock dropped 85%. Two (2) years later, it returned to its value, and it is poised to jump significantly.
It took his stock a little over four (4) years to recover. Eventually, he sold it for a nice profit.
The examples continue, but there is an important point.
Should I hold onto a stock when it loses its value?
I am not trying to suggest that you should hold onto your stock when the price drops ALL of the time.
If the company loses a key member, then you might need to consider selling, even at a loss.
If the company suddenly has a fire in its key plant, it might be a good time to sell.
However, if you bought stock...
- in a company that has a good business and
- at a bargain of a price,
Good deals are good deals, even if the deals get better tomorrow.