When it comes to investing, it’s important to consider more than just price movement. While it can be tempting to cut losses when a stock’s price drops, doing so without considering the company’s fundamentals and prospects can be short-sighted and may result in missed opportunities.

A fundamentally good company is one that has strong financials, a solid business model, and good growth prospects. These companies are often leaders in their industries and have a track record of success. When a company like this experiences a drop in its stock price, it’s important to consider why this is happening and whether it’s a temporary setback or a sign of deeper problems.

Take Tesla, for example. Despite experiencing some volatility in its stock price, the company has continued to deliver strong results. In the second quarter of 2023, Tesla delivered a record number of vehicles, topping market estimates as price cuts and U.S. federal credits helped make its electric vehicles more affordable. This is a clear sign that the company is fundamentally strong and has good prospects for the future.

Cutting losses based solely on price movement can be short-sighted because it ignores the bigger picture. While it’s never pleasant to see the value of an investment drop, it’s important to remember that stock prices can fluctuate for many reasons, some of which may have nothing to do with the company’s underlying fundamentals. By focusing solely on price movement, investors may miss out on opportunities to buy into fundamentally good companies at attractive prices.

In conclusion, when making investment decisions, it’s important to consider more than just price movement. By taking a broader view and considering a company’s fundamentals and prospects, investors can make more informed decisions and avoid missing out on potentially lucrative opportunities.