Never throw good money after bad

It’s definitely an interesting holiday season. Bitcoin is below $4000 from the peak of almost $20k a year ago; and the US stock market is tanking.

I’m sure glad to be out of Bitcoin since Dec ’17. It reminds me the saying: “It’s better to be out of a trade wishing you were in it, than to be in a trade wishing you were out of it.” 😉

Bitcoin falling in December 2018.

Anyway, tho my longs were all stopped out already a while ago, I left a moderate position in the SP500 index ETF (I do my analysis on SPY but since it’s forbidden in Europe, I use alternative ETFs to trade). I wish I didn’t but because it was on my separate investing account without a clear plan, I decided to hold in October, add to my position in November; now in December it seems already too late to be selling the possible bottom. The market is way oversold according to most indicators. There’s a saying: “Run quick or not at all”. As I didn’t cut my losses short quickly, I don’t want to be selling the market (short-term) bottom. Even if we’re going into a bear market from here, I’m anticipating for some kind of a dead cat bounce at least. Then I’ll take my chance to exit. No worries. This is what happens if you don’t have a clearly defined exit plan before you enter a position.

SPY falling in December 2018.

I’ve come to a conclusion that dollar cost averaging is for value investors who are buying a company b/c of its fundamentals and like to get it cheap. Pro technicians never average down; no rational reason to buy more on the way down – you want to be buying stocks going up!

Lesson Learned: Never throw good money after bad.

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