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What is “adding to a loser”?

What is “adding to a loser”?

“Adding to a loser” describes continuing investment in a stock or fund that has continued to decline. Continuing to invest when it is going down in value can be a solid play up to a point.

If you remain bullish on the company or fund, you may be getting a great deal on the shares that you purchase. When the price rebounds, you will have full participation in the upside with more shares than you would have otherwise.

This is also known as Buying on Weakness. Obviously, this sounds fine until you are the one putting your money into the stock that continues to decrease in value. You could really be buying into the unfortunate fate of a company doomed to fail.

Value investors attempt to find companies whose stock is oversold or undervalued by the markets.

Through fundamental analysis, which includes looking at the balance sheet of a company and the market information about peer companies, they buy equities that have fallen out of favor or are “off the radar” for most investors.

Adding to a loser could be a value investment, or it could be a money pit.

Keywords: bullish, fundamental analysis, value investing, oversold, buying on weakness, price rebounds, adding to a loser,