Waiting depends on if the stock is undervalued

Personally, I have a low tolerance for losses when it comes to trading stocks, so if it drops below .1% I'll sell and buy at a lower price as soon as it looks like it's recovering. I also sell when the stock is at 1% gains or higher, before it drops any. At this rate, I can still make the mistake of reinvesting timing about 10 times before I incur any actual losses.

However, although this is a great reinvestment strategy for stocks that are doing well, it doesn't always work for stocks that are bearish in the long term. In this case, it's best to take a loss, as it's trending downward and better than a bigger loss.

Why invest in bearish stocks in the first place? Well, it's no secret that some of these do extremely well at points during what's called a "squeeze"; a squeeze is when a stock rises in price quickly. During these squeezes, the stocks that have the poorest track record tend to have the biggest short term gains. However, timing is everything. I recommend only buying while a squeeze is happening and taking profits immediately for a quick 1-2% gain. Anything more is greedy and prone to great losses as a result.

Example of squeeze gains: suppose the stock Wobbly Wobbly (made up name for a made up company) has a track record of losing at least 10% each year. After about 10 years, the company isn't worth much but there's suddenly a lot of volume and buy orders are happening in the millions, causing the price to go up. Before it's too high, you buy in while the gain is only 5% and the stock keeps going up. You decide to set a stop loss order so you still have at least 1-2% in gains, in case the price goes down suddenly. Well, in this case, it just so happens the stock keeps going up so your stop loss was never actually hit. So, rather than waiting until it drops, you decide to take a profit of 10%.

Example of squeeze losses: you found this company called "wobbly wobbly" and noticed the price went up significantly recently. Despite the long term bearish trend, you decide to invest after things cool off a little and it's at a higher price, somehow expecting these massive gains to happen again. Well, the stock goes up .1% then immediately drops by 50%. Using your knowledge in long term stock trading, you decide to reinvest at a lower price, thinking that all stocks are sure to go up to the price they were just at. Suddenly, the stock has another 50% from that point and your portfolio is down 75% until you decide to sell.

Lesson here is invest in long term gain stocks or take profits before the stock goes down, even .1% is better than no gain. 2% loss is also better than 20+% loss for a short term gain stock. Don't chase getting rich, chase what you know will give you at least a small profit, or a very small loss.