I bought stock in a oil drilling company and at $8.95 and now the stock is down to $5.50?

What should I do? the obvious is to sell, but I heard that when stock go down that means that automatically your investment firm is able to accumilate more shares...which mean you own more shares but at a lower cost...is this true or should I just sell this stock before I lose more money.

How many shares do you have? and what company is it that you invested in?
I think you need to get the answers to that question. Look at their financials and see where they are going? If their future looks bright, buy in, if it looks bad cash out.
Can't just make moves off the stock price, cause sometimes stocks go into ranges where they are really good value, then people buy them up. So I would need a lot more information before I could give you advice on what to do.

Also you would get more shares if the stock pays dividends and you reinvest them into the stock. Essentially you would be buying the same stock at a lower price.
Another tip is look at what the sector is doing, if the whole sector is down, then you may not want to dump the stock. If the whole sector is up except for your stock there probably is a reason why, find out what that is before you make any rash decisions.
Remember you should Diversify though

It really depends upon what's going on with the stock. You only get more shares if: you buy more shares or there is a stock split. A stock split is a mechanism companies use to lower the price per share of their stock. Your stock isn't worth any more in total, you just own more shares at a lower price. At 8.95 a share I doubt that it was a split. I think this is where you may be confused. Before dumping the stock, do some homework. Go to yahoo finance and gather some research information. At least you will have made an informed decision whether you sell or keep it.

Investment in the stock market are for the long term....you wanna gamble on the markets short term better go to Vegas and at least have fun losing your money.

all stocks have dipped a bit. I would hold on to it unless you have info indicating they are going under

If you aren't putting more money in, they can't buy you more shares. If this were an account where you are pumping more money into it all the time (like a retirement account) they could buy more stock with your new money. Your old money is spent at $8.95 a share and all you'll get back for it is $5.50. This is sometimes a very good move to make (depends on specifics.)

If you think this is a dead duck and will keep losing money, by all means sell. Most likely though, you should stick through this downturn and wait for it to get better before selling. See if you can determine what you think the company's future will be. If you sell now, you lose the money. If you wait, it could be good, it could be worse (but you already know it is bad, so why not gamble).

People's normal reactions are often the opposite of what they should be doing. When your stock goes up, you buy more of it, even though your new money already missed out on the stock going up. And when it goes down, they sell even though they are a day late to help themselves. You have to be pro-active with investing, reacting leads you to do exactly the wrong thing. If you are too late to get into a good thing or out of a bad thing, it is usually best to let it ride and see what happens.

Your shares have gone down over 38% and according to received wisdom you should sell them. However, small drilling companies are always hit and miss affairs and if you do not have many of them you may wish to hang on another year or so, in the hope they may strike it lucky.

The price doesn't matter right now. If you believe its a good company with good future, then either wait it out or buy more. If you changed your mind for some reason (other than stock price) and think its a lousy company, then dump it fast. Good stocks recover and bad stocks keep dropping like a stone.

A) Why did you expect this stock to go up?

B) Why isn't this happening?

C) If the story behind your initial purchase (A) is still intact, then think about buying more.

D) If ther is no (A), sell the stock and buy CDs.

D