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What is a Falling Knife? I Caught a Falling Knife Stock! - YouTube
Channel: BrentInvesting
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hello everyone and thanks for tuning
into the financial investor channel my
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name is Brent today we're going to be
talking about a falling knife what is a
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falling knife in the stock term so a
falling knife is a slang term for a
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stock or securities that at its current
price or value looks like it has dropped
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to a significant point where you know
it's considered undervalued and it could
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rebound but if it doesn't ream out and
this is where the falling knife comes in
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you could eventually lose all of its
value or say the company goes bankrupt
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or the equity becomes worthless you
basically lost all your money that you
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invested on that company now that
doesn't help happen very often and it
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takes quite a while but I believe that
the company that I had put into my
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portfolio was bleeding out my you know
was bleeding out some of my gains and
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kind of diluting the account to the
point where I just had to let go and let
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go that falling knife so towards the end
of the video I'll ask for your opinion
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whether I made the right or wrong choice
and to you guys I did sell it off today
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I did sell it out sell it off with a lot
of loss which isn't normally what I
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would like to do with any of my
investments even ones that are in the
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negative which some of them are but they
are dependable stocks this stock was the
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riskiest investment that I've added to
my portfolio and that's why I have my
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diverse portfolio I don't care about
having multiple stocks within an
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industry it's about having multiple
stocks with your money divided and
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equity in that way if one stock tanks
10% you know the other sox have still
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balanced it out
so we're going to be talking about the
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stock ticker symbol di n which is dying
equity this is my falling knife this has
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bled out for the past about week or two
and it's just been on a downward trend
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and I thought I had bought it at what I
was considering a value point and that
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it would make a recovery but I was wrong
and I think in the long term it's going
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to
to fall so I had to just let go of that
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knife let it hit the ground maybe I
could pick it up later
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but this was a good a good eye-opener
for me
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that risky stocks adding to my portfolio
isn't worth it in the end
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I'd rather invest in stocks that I know
that are going to be doing well in the
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future even if they have a low yield I
know that they'll actually offer me a
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return their company will continue to
grow I don't have to worry about them
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going belly-up in the future you know as
a dividend investor a long term investor
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I want the companies I am investing in
now to have a future I want them to be
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around in 15 to 30 years because I want
my money to be in them for 15 to 30
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years you know when I hit 45 you know I
want them to still be around
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so dine equity has n controls Applebee's
and I hop now I myself do not eat at any
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of these I find them not too amazing but
I invested in them so that was a fault
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on me so let's go ahead and take a look
at their 1 year and 5 year we can see
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that you know I looked at them they were
way undervalue their their their stock
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was down a $30 range I think about I
bought it was in the $40 range now to
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the $38 range I basically lost about two
or three dollars a share probably more
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than that and they've continued to just
plummet 2% alone today and throughout
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the week it's been even worse than that
so I just had a let go of that falling
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knife so I bought it on the 25th of July
looking at my information here 25th of
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July is when I bought it and I sold it
off today for a negative 11% that is why
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you want to diversify your portfolio's
so smart move diversify it doesn't
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matter if you buy stocks within the same
industry just mix it up a little bit
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have five stocks instead of two sucks
that way if one stock plummets
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you know you're not losing too much of
your equity within those two socks
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you're only you're losing a percentage
of one stock within five instead so so
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for the month total it's gone down 10%
that's more than you know most people
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gain a 12% actually three months it's
down 30% one year it's down 49 almost
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50% in five years it's down 30% so big
red flags I don't know why I added this
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one to my portfolio you know I took a
risk and now I'm covering my hands and
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bandages looking at their chart this
thing has no support bar it has no end
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in sight as far as when it's going to
stop falling usually I like to invest in
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stocks that are setting 5% upwards and
only 25% downwards this one you can see
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that there's a lot of red here I would
say that this this trend is much more
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likely to flip on tails and go down then
flip on heads and go up they say the
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stocks have a 50/50 chance they go up or
down that's not really correct in a
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sense the stock can go up or down but
the percentage-wise
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that that stock is more likely to go
down or up it's pretty II you know it's
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not easy to calculate but you can look
at its trend and look at its history
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look at its future and decide whether
that stock will be around in you know 30
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years and this one I don't see this one
doing very well so that's why I stopped
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sold it off looking at its analysts
forecast it only has four analysts
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compared to IBM which had 26 analysts
somewhere around 34 the following year
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now that just shows to show you that
they put four analysts on the specific
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stock they didn't give it much you know
very many looks at it so they say that
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it can't continue falling anymore at
that its lowest point that it's ever
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been
ever this is like the lowest point was
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37 dollars and 36 cents that's the very
bottom of the totem pole they say that
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you can only gain from there 13% would
put it a low for 43 medium would be a
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55% gain high would be a hundred and two
percent gain I don't see any of that
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going on I just think this thing would
just continue to bleed out we'll see in
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a year how it will be I'll probably make
a video on this again in 3 months to say
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whether it made the right choice the
wrong choice or you know in the end I
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don't mind over I'd rather put money and
another stock that has value such as
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Johnson & Johnson or Procter & Gamble
those are two that I'm waiting that I
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know are reliable for the long term and
I'm just waiting to buy into them
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because right now they're overvalued for
what I consider to buy um let's see
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forecast now looking at their financials
just their earnings report that's
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another red flag you can see that the
earnings support has been dropping 10
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cents estimates per quarter once at
dynamic order 146 a quarter 137 a quote
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it's actually dropping more than 10
cents a quarter that's not great you
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know it's going down it bottomed out
right here 120 to 118 there you know I'd
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like to see what their predicted for the
future but I think this is just on a
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downwards trend so got rid of it I don't
think I'll ever buy back into dying
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through the future just because I know
there's better investments out there
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that they don't offer the high yield but
eventually I will reach that yield in
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time and they'll provide a much safer
earnings ratio for the 1 year 5 year 30
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years out you know I know I'll be making
some money back plus with those
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dividends reinvested I'll get my yield
up there I'll have to worry about that
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financials they didn't look too bad when
I looked at their income statements for
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the year they were staying pretty much
within you know a couple thousands off
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at the bottom here and the quarterly is
where they kind of cut huge 26 23 21 14
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so that's just a huge loss on the
quarter I don't know if nobody's going
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out to Applebee's and IHOP but go out
there no I doesn't matter to me anymore
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I sold off of it don't care but I'm just
making this video so it's basically just
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an example of what I buy that I
considered a falling knife it bled out
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my account for a good two weeks inmates
I looted some of my gains for my other
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stocks I sold it off today in what I
would it wasn't a great sell-off point
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you can see that for its month it's been
going down for its week it's been going
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down I sold it before it toppled off
this High Point right here I sold it off
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and it did make somewhat of a recovery
but I think Monday is just going to fall
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again so not too worried about it right
here it even says dine equity avoid for
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now so big big thing on it right now
that just got announced that 1244 am so
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avoid it for now is my op opinion as
well just avoid dine equity so that is
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it for this video I just wanted to make
a quick video on basically what a
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falling knife is in my experience on
catching falling knives I of course let
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go of the following knife put some
bandages on I'm sure I'll make back up
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the money that I lost oh I've already
you know I'm above overall and I may
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have lost 11% in that specific stock but
between all my other investments I am up
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more than 10% so it definitely beat the
loss that I took from that one and that
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is it so if you guys have any following
knives of your own that you had a cut
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off or if you think that I made the
right choice if you think I made the
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wrong choice let me know in the comments
below I am really interested in your
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guys's opinions out there and I'd like a
comment to you know let me know whether
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you think I made the right choice or
wrong choice if you have any questions
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or just want to say hello please leave a
comment below and also click the like
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button if you like these type of videos
and subscribe for future financial
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videos that is it for this video thanks
for tuning in and I will see you next
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time
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