Guess I need to qualify that a bit, if the whole market has dropped it can be a great time to buy quality companies. Late Spring last year was a good example of a good buying opportunity. However I didn’t want that crash to happen, I was thousands of pounds in the red at the bottom.
What I’m really talking about are the threads where people are piling more and more cash into a falling penny stock, then trying to rationalise the loss by telling themselves and everyone else that they want it to carry on dropping so they can buy more. That is a great way to increase your risk and exposure to a bad investment. Many of these stocks will either keep on dropping an not recover for years, go bankrupt, or be forced to issue more shares to raise cash and dilute everyone into oblivion.
There is an opportunity cost to this. While you are trying to catch a falling knife and waiting for it to go back up a bit so you can at least break even you could be diversifying to increase your chances of picking a winner, or just buying successful profitable companies.
I have become a much more successful investor since I dropped the “Buy the dip” “Double Down” mentality towards losing positions