The stock I'm holding has increased value, do I buy into it to increase the amount of units or move on to purchase other stock?

Hi there!

That’s a great question. It’s sometimes difficult to decide if we shld add on to something that has gone up a lot because we believe it can still go much higher. Or shld we look for other stocks that have yet to gone up.

There are many takes on these. You can read...

1. The intelligent investor - Benjamin Graham

2. One up on Wall Street - Peter Lynch

3. Conservative investors -Phillip Fisher

4. Poor Charlie’s Almanack - Charlie Munger

I personally like to calculate intrinsic value for individual stocks. It gives us a better idea what’s a good price to pay. It may have gone up a lot, but the stock could still be undervalued!! Tough to find deeply undervalued stocks today that are of fundamentally strong companies, but there are definitely still a handful!

I feel it boils down to your confidence in the stock. Personally, I would buy more if I believe this stock will continue appreciating over time; stocks such as the big FAANG companies in the US market (Facebook, Amazon, Apple, Netflix, Google) are prime examples of extremely powerful growth stocks. If you are familiar, comfortable and confident the business you are investing into will continue growing such as the above mentioned organisations, buy into it if you have the funds.

However, I believe you are asking this question as you have doubt in the stock you bought. In this case, you can try to search around for other undervalued stocks in the meantime while waiting for a market correction for the stock you are holding. But beware! Even if there is a market correction for that stock, it might reverse to a higher price than it is now.

With that said, would you mind sharing what stock are you referring to? Maybe I can share my views on this stock and see what we can learn out of this finding 😀.