the greater fool theory would have to apply. i.e everyone believes they'v done adequate research before acting, while infact there is smone who has better info than them..

@Statmeister, interesting. I long ascribed to the 'greater fool' theory. But discovered more recently 'value investing'.

In reference to your first example:
When finding an outstanding company at a sensible price you may actually choose to be the person buying at 124.90 The guy selling would be happy (having made short term gain) but I may see the future long term value the company would create and consider it discounted.

So the company goes on to generate much greater profits/additional value than measely 20% and both people gain in the end. To avoid being the loser, think like a winner and move beyond 'price'.

e.g one who bought coop at sh. six could exit with no regret at lets say sh. twelve.. but another would want to buy it now in the belief that it may get to sh. twenty.. hence only time will tell who was a ''greater fool''

Wazuans, this is what am talking about:

An investor puts 50 bob into KQ with a 3 year outlook of gaining 100% (100 bob). Consider the following scenarios:
- 90% chance of making positive growth
- 50% chance of making projected (100%) growth
- 10% chance of making negative returns
- 3% of making large losses

While in normal times our growth strategies would cover us, there are times when we are too exposed (think oct 2008) when diversification doesn’t work (NSE falls as fast as individual counters), trying to sell to others who are also trying to sell. . .

If our market was a bit more robust, an investor could buy a stock option for KQ, say for 5 over next 3 years. If the stock goes above 55, the investor would exercise this option and simply sell at the market price. But if the price stays below 55 (including when the stock retreats to last years 20 bob), the investor would limit his / her losses to a maximum of 5 bob per share.

Are any of you running similar or alternative mitigation strategy in our market?

Please help . . .

I'm a slow reader so I haven't read the whole thread....

@StatMeister; "It ain't necessarily so" [now that's a beautiful song - I have the Aretha Franklin version...]

Any way; There are many people who bought KenGen shares at 11.50 during the IPO. Now that price shot to 39 and then gradually feel back to 13. Today it close at 17.15

If you bought at 13 and sold today at 17, you'd make 30%. But, no one has lost 30%!!

The guy who buys from you at 17 is looking at the fact that this share was once 39 and he/she is betting that it still "has some life" and may get back to 39 in the near future.

For those who bought at 39, you can be sure they are not selling today!!

How do you ensure that you never lose? Well, never sell at a loss! Just wait it out. You only lose when you sell OR if the company closes down [like almost happened to Uchumi]