How large a drop in an individual stock makes you decide it’s significant and worth buying?
For me, it’s interesting when a stock falls more than 20% over several weeks or months while the fundamentals haven’t changed. At that point I start paying more attention to it and I also track the fair value, which I find here on the Fair Price Index.
This is a tough question because it depends on which stocks we’re talking about. I have a lot of dividend stocks, and if the drop is around 10% I significantly increase my position.
I pay more attention to stocks relative to the 50 SMA on the weekly chart.
I understand what you’re saying, but some stocks rise purely on investor expectations by as much as tens of percent, so a 20% drop can sometimes be too little. If the company is, of course, high-quality and the growth is justified, then yes — any decline over 10% is worth monitoring for further developments.
It depends on which company it is and also on the valuation. For example, I added to $AMZN last week. I wanted it to have a larger share in my portfolio, it recently reported great results, and I started buying on a 10% drop from its ATH. Similarly $UBER — I opened a position at about 65 USD and when it reached 100 USD I regretted not buying more. So as soon as it fell 10% I started adding. In general, I think that if you wait for a 20% drop in top companies, you might never see it or you’ll be waiting a long time.