Rethink Bailing Out

My biggest failing was selling a stock rather than buying one. Some years ago, I liked the looks of Foodmaker (now Jack in the Box), so I bought 200 shares at $12 each. The very next day, there was an announcement that a hamburger from one of its eateries had caused a death. The stock promptly dropped to $8. After a few months it rose to $10, and I was happy to get out.

Now the stock is well over $20. The moral: If you think a stock is worth a certain price, don’t panic and sell because it suddenly drops. It will probably make a comeback.

--Joe Soper, Mesa, Ariz.

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The Fool Responds: It’s true that shareholders sometimes overreact to a company’s bad news. These instances can be good times to buy the stock if, after some diligent research on your part, you believe the firm is on solid ground and poised for growth. Keep close tabs, though -- some companies never bounce back.