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Technology Stocks : QUANTUM -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4403)	10/30/1997 3:19:00 PM
From: robert elmasian	Read Replies (1) \| Respond to of 9124

Yiwu Zhang, this is a long post, somewhat off topic. You took a pretty big hit when the QNTM went down, something that eventually happens to anyone who invests over time. It my case, it has already happenned a few times over the years. Let me tell you about a psychological trap that I have visited and which Academics have studied. When individual investors have a big loss in a position, their hopes change from investing for a gain to escape. When the stock gets back to their purchase price, they usually sell. This is usually a bad move when stock has been low for some time and then rises. The rise usually continues. This happened recently to a friend of mine who bought BAY around $26, watched it fall well into the teens, and bailed out when it climbed back to $27. BAY then continued to climb past $40 before it tumbled back to $31 in this crash. Moral: if a stock is steadily climbing, "the trend is your friend." On the otherhand, if the stock does a quick bounce back and you still want out, sell even though you do not get back your purchase price. Quick recoveries often occur after big falls because a stock is briefly oversold. Such "technical" bounces rarely reach back up to the old level. In summary, if you want out on QNTM, sell on the bounce, even if you lose some money. Otherwise, if you hold over time, delay exiting when the stock reaches your purchase price. Hope this helps, Bob