There’s a famous financial adage that goes, “Don’t attempt to catch a falling knife.”
When a security is any sort of drop or free fall, some will view this as the opportune time for acquisition because it should be a good deal. However, there is a risk because one does not know the duration or depth of the drop. The attempt to seize upon a deal can lead to an even greater loss, which is why financial advisers often urge investors to not be tempted by a plunging asset. Wait for it to hit bottom or stop falling.