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Wednesday, 8 June 2011

Following someone investing idea? (3)

Just For Thinking ....


Following someone investing idea? (2)

Seriously. Don't Average Down! It may cause you sleepless nights. What for.

Buying = What + When + How MUCH

Again.  At investing forums, cboxes, and blogs, you saw so many people keep buying the same stock that you have already own quite a bit at higher price. Then you cannot "tahan" and thinking that now it is the right time (When) to buy more to average it down since many people are now buying.

But, don't forget. HOW MUCH is also an important part in the buying equation. You can Average In (buy slowly); but seriously, don't average down just because it is getting cheaper and seeing your favourite cyberbuddies are buying too.

3 comments:

  1. Yes, average down can be really dangerous at times;especially when you pick the "wrong company". But what about average up? Let say you are averaging down on SPH in a Bear Market compare to you are averaging up in a "recovering Bear market"(who can tell really recovering?); Which will give better averaged price and most probably "safety" to boot?
    Sad to say, i am trying to learn how to average up. i have no experience; But most authors only recommend average up.
    i will definitely try average up.
    Anyone, any comment?
    Thanks!

    ReplyDelete
  2. Yes. Definitely. Average Up or Pyramid Up ( i.e. buying smaller and smaller lots on the way up) is a better risk control mgmt strategy to increase weightage in the portfolio.

    If the stock unexpectedly turns sour, the entire holding can be immediately exited at no loss or some profit.

    I did it for my long-term Kep Corp and Semb Corp over the years and in fact bringing Kep Corp to the top holding.

    ReplyDelete
  3. Hmm... I see. i will try this new strategy. Many thanks.

    ReplyDelete

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