Monday, June 27, 2016

The Hardest Investment Question

On Friday, I wrote that I thought the reaction to Brexit was excessive and took an additional long position in US stocks.  Today (Monday) the market is down over 2%.  The decision I made was a short-run trading choice based on what I thought was an oversold market.  Well if the the market was oversold Friday, it is more oversold now.  So do I buy more?  On the other hand, if it thought the market would recover from Friday's drop and I was wrong does that mean I don't know what I am doing and should abandon the decision?  That to me is the hardest investment question.  When do you double down on your convictions and when do you conclude that you are wrong and cut back.  Unfortunately, I have no answer to the question.

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