Ask TheStreet: Valuations

Every company goes through tough times that can cause its stock price to swoon. Sometimes it's the company's fault, sometimes it's not. Higher-than-expected energy costs, labor problems, a competitor gets lucky ... these things happen even to the best companies. And when they do, you may get an opportunity to buy stock at a cheaper price than you ever have before.

If you believe the fundamentals are still there, then averaging down can be a huge benefit. There is no reason not to take advantage of a sale.

But if you find yourself continually buying shares at lower and lower prices, you may want to dig a little deeper to find out why the market is not as keen on your beloved company as you are.

Maybe the market, which supposedly represents the collective wisdom of all investors, is seeing a problem you aren't. Or maybe you are so intent on lowering your cost basis that you refuse to see any real competition on the horizon.

The hazard is that one day you wake up and realize that your favorite company has real problems. And while you were busy tuning out the bad news -- and buying more shares in the process -- your portfolio has grown out of whack and overridden by a truly troubled company.

Remember that love can not only break your heart, it can also break your bank account if you let it. So don't.