Can only buying a crash be profitable?

Just to illustrate , what happens some times if we buy stocks on crash , its really difficult to recover the money invested , in my example i bought PNB in market crash ( and also thanks to KITE2 Platform ) just to cover the loss , i opened another trading account & buying selling PNB to recover the losses.


1 Like

This is the extreme case of timing the market. And it is enticing for sure if you could predict when the crash had actually bottomed out.

Nick Maggiulli covers this on his blog here and here though the data is for the US market.

TL;DR version: You have to be extremely lucky in making those predictions.

1 Like

You cannot predict the accurate bottom but you can start buying in staggered manner once the indices correct 5-10%

2 Likes

And you’re sure that it won’t go down another 20%? :wink: Remember Suzlon, Rcom, Yesbank.

Hence the staggered approach, we are not buying at once thinking of a particular level as bottom. Of course one can always wait to find the rock bottom.

I never suggested to buy stocks. This is for Nifty bees

If for index, a 10% fall is a good time to buy, although the up move may not come soon, so there is a chance that we may have bought early, just looking at the fall. Of course if that is our plan, then it is fine.

Personally, I never try to find rock bottom. I only buy on upward momentum with stop losses, not the downward movement.

Just keep buying bees at every 2 percent fall. It may take time to recover. But it will for sure some day.
You can’t say the same about stocks. So from risk perspective I too prefer bees.

Which essentially means you are a trader, and a momentum trader. The discussion was about buying index when it falls by a certain percentage.

Well, I don’t think a comparison is needed with buying stocks and index, as they serve different purposes. Each side has its own obvious advantages and limitations.

I too buy indices, but more from a trading perspective so far.

I only buy long term but on upward momentum. So I wouldn’t call myself a trader.

I didn’t see the discussion being index-specific in the OP, but perhaps I misunderstood.

Indexes should of course be SIP’ped. Nick’s book “Just keep buying” is a good read on that.

1 Like

You mentioned stop losses, so I thought you are a trader. If you are an investor, why stop losses?

And fundamental investors usually buy at lows and not when the price has started moving up.

Are you a technical investor?

Finally at last recovered back the losses ,after many years , i am able to recover the loss , due to trading platform crash of KITE-2 version , Thanks to Zerodha :thinking:

You should always have a stop loss, to preserve capital.

Even if you invest only in ETFs and MFs, a black swan event like a war could wipe out 50-60% of a stock market. Stop losses allow to to preserve some of the capital to live to fight another day.

2 Likes