As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Sunday, 19 June 2011

Average Down or Pyramid Up? (2)

Read? Average Down or Pyramid Up?

Like it or not. Investing in the stock market is still a Game of Strategy. The ones who have better strategies that are closer to their heart will be most likely to reach their Investing Goals.

Winning the Loser's Game

When the stock market provides you the opportunity to average down; it is telling you that you are on a losing game. What is your strategy in this game plan by Average Down? Are you are trying to Win the Loser's Game?

Winning the Winner's Game


You spotted the opportunity in the market to win it bigger. You pyramid it up and raise the average cost in a winning game. When you are trying to win in the Winner's Game you will have margin of safety to exit when the market has proven you wrong. You may finally choose to leave the game with no loss or some profit.

Conclusion

There is No absolutely right or wrong but Only belief or bias. So what did you believe or bias?

3 comments:

  1. Hi CW,
    Yes, everyone has his own bias and both pyramid down or pyramid up can work. i think you use the "picture" of a pyramid is very picturesque. i have been using pyramid down since day one. But it is a quite scary in a bear market for i may have caught the "proverbial falling knife". In fact, i think i had at times.No! No! No! Don't ask me how i still survive and talking to you.
    I want to try your method of pyramid up in a bear market but i think the difficulty is picking the starting pyramid up point.
    In the book by Richhard Koch, he is strongly anti pyramid down. He encourages the principle of pyramid up. He even gives some examples. i have read this book quite a long time ago. But my habits of pyramid down is still with me. They say,"Old habit dies hard" is very true.
    Nevertheless, i am very happy to know and encouraged that you have pyramid up successfully.
    From now onwards, i will "kill" my old habit and try pyramid up in the next bear market.

    "Ya! CW8888, may i have the privilege to ask 1 stupid question? Err.., when do you start to pyramid up in a bear market? Is there a cue or something""? Ha! Ha! Do you care to share your take? Ha! Ha! No?

    ReplyDelete
  2. Read the two old postings:

    Look closely at the year and its associated remark. The clue is there.

    http://createwealth8888.blogspot.com/2011/02/high-dividend-yield-stocks-10.html

    http://createwealth8888.blogspot.com/2011/01/high-dividend-yield-stocks-9.html

    We don't necessary need to accumulate in the same bear market but can wait till the next bear to pyramid it up. Do we have the type of patience to wait for multi year market cycles to happen and to accumulate?

    What you think?

    ReplyDelete
  3. I admire & praise your patience sticking throughout the years for Keppel Corp. Now i really understand your way of pyramid up.

    For me i use pyramid down to get a good historical average price for a blue chip and even a cyclical NOL, during a bear market. i would then take profit of these stocks during a bull market. You can say i am a Bear/Bull cycle trader not a really longterm investor like you for Keppel Corp.
    Yes, nobody can time the market accurately; the Bottom & Peak but we don't have to be accurate. All of us will know after Bear's arrival; so is the Bull's arrival. Since i can never be accurate, that's why it's natural for me to buy and sell too early. But it's O. K. as long as i survive and make money.
    But now i think i can "borrow" your pyramid up strategy in a bear market instead of pyramid down. i think it is a "better and safer" strategy. The only problem is i must be very careful of the starting point for pyramid up. For this maybe i have to try Richard Koch's recommended strategy.
    Anyway, thank you for sharing your way.

    ReplyDelete

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