Originally Posted by
Siriusowner
There are several stages investors go thru when a stock is tanking.
1st - When the stock starts tanking, they are optimistic and think that it will not breach their avg. price.
2nd - Then when it breaches it, they think the stock is just becoming inexpensive and buy more.
3rd.- Then when it continues tanking, they think that it will rebound and buy more.
4th. -As it continues tanking, they still have faith in the company and buy more shares.
5th.- Then they reach a point where they just can't sell anymore, their losses are so big that they just can't take the losses anymore and start averaging down.
6th.- Then they reach a point of dispair, a point where it does not really matter to them anymore but they still can not take the losses. They continue averaging down.
7th.- The stock continues tanking or reach a point where is going no wehere (like SIRI). They sit on the stock waiting, waiting, waiting...and perhaps averaging down.
8th.- Then, reality sinks in and some of them start selling at a huge loss. Some, stupidily, like me, come back in. Some keep holding.
9th.- Finally there's capitulation where the stock sinks so fast (and the company finally declares BK) that by the time they sell (if they have time), they lost all their investment.
10th.- The end.
I am not going to tell you to stay away, the stock is cheap but you will get what you pay for (what is the difference between cheap and inexpensive ?). Read the fundamentals and study them. Someone may tell you that SIRI is not trading on fundamentals but the reality is that the pps is where it is because of those fundamentals, whether people like it or not.
Just because the industry is sexy, you might be a user and like the service or the company name is nice, does not make it a good investment.
Even if you say "But I can buy thousands of shares !"... true, but you could still lose your money the same way as if you were investing somewhere where the pps is say, $30.00 (how many shares of SIRI can you buy with $30.00 ?).
Again, study the fundamentals, they will tell you a lot. Then make your own decision (or consult an advisor... still if you consult an advisor, do your homework, do not trust him blindly, se what happened to all those people that invested with Madoff ?) and ESPECIALLY, do not base your investment decision on what people tells you in these forums.
WARNING: Stay away from sharks that promise high returns, they are wolves on a sheep outfit...again see the Madoff case.
ps: If you are here just to trade, then do so, buy in the low teens and sell in the high teens. Never trade less than 10000 shares at a time, the fees will eat you alive if you trade less. Be prepared to take a loss.