If you can't beat em ...
Don't join em!
If a stock insists on crashing ...
Don't ride it down!
When a stock's price falls quickly and far, it is always doing so for a certain reason!
Often bad news, earnings or something similiar is to blame. Most of the time, when this happens, the stock enters into a very bearish downtrend, which continues for several weeks or months or even much more.
Sometimes that trend can keep on going on and on until the company's final bankruptcy.
If you can distance yourself from the situation, and take out the emotional element, you will see that when this happens, you have a genuine opportunity to save some money:
Sell it and ... Avoid losing more!
Still in the falling stock and you're waiting for a rebound?
Forget it ...
Its not going to happen. Take your losses and move on!
Anytime a stock is on a downtrend, despite what hype you may hear, it is most likely not "highly undervalued" and not "ready to pop any moment."
Everyone wants to believe that all stocks are going up. This is because most investors are just that, investors.
They are not traders. Investors most of the times, buy and hold, and want stocks to go up.
Traders, on the other hand, understand that this perfert world does not exist, and will take advantage of it and you ... "the investor."
Stocks do go up and many times do go down ...
To take advantage of that, you must identify when the time is right to buy, and when to sell!