Topic: How To Invest

What is Pat’s commentary for the week of September 6, 2023

Article Excerpt

Early in my investment career, I used to run into stock-market enthusiasts who you might think of as “recreational investors”. They participated in the stock market the way horse-race enthusiasts participate in horse racing: that is, pick a horse on a hunch, bet on it, and hope things work out in your favour. Back then, some recreational investors used a strategy they called “putting in a stink bid”. When a stock they liked was in a sharp falling trend, they would enter a standing or GTC (Good Till Cancelled) bid for the stock at a price substantially below the stock’s lowest recent price. With a GTC order, your order only gets “a fill”—that is, you only get to buy the stock—if the stock gets offered in the market at or below your “stink bid” price. The problem is that the stink-bid strategy is just another way of betting on a hunch. If your price is too low, your bid will never get filled…