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When a One-Day Price Drop Erases Years of Stock Gains — How to Spot These Early and Respond Smartly
What is the fuss?
Investors spend hours researching a stock, investing money, tracking it over time, and investing more as they gain confidence.
The stock performs well and delivers on its future growth strategy. You have slowly built a significant position in this stock.
The stock market is in a bull run or is moving up in a volatile manner. That’s just normal. Everything seems right.
Then suddenly, out of nowhere, this stock’s price drops in a single day. There is nothing wrong with the overall stock market. Instead, the stock market index is inching up. There is no pandemic, no crisis, no political turmoil. The stock you have built a significant position has fallen, wiping out many years of returns in a single day. Ouch !!
Myriad questions start crossing your mind.
- Were you just unlucky?
- No one could have seen it coming, right?
- Is this why people call the stock market a place of gambling?
- Were there blindspots in your research process?
More often than not, this is a common phenomenon in the stock market. I mean both: A single-day large…