As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"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

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Sunday, 7 September 2014

How did we lose money in investing???




First, we invest in good stocks that turned into bad ones; and finally, we average down more bad stocks into worst nightmares.












Never, never, ever average down!

We don't need to win back in the same manner that we have lost them! - Createwealth8888


Check around those who have lost big in the stock market. 

Is that the how?

Read? Average Down

 



12 comments:

  1. I have yet to test drive Average Down.

    ReplyDelete
    Replies
    1. SMOL said "Crash Got Sound!"

      Ferrari or Porsche?

      LOL!

      Delete
    2. 1) CW and Money Honey,

      Want to test crash got sound, its better to do so when portfolio is small.

      Crash Volkswagen Polo or Suzuki Swift less painful than Ferrari or Porsche ;)



      2) CW,

      I am tired to play the bad cop role here. So glad RayNg is now playing the counterbalance role to your "No Average Down" view.

      I am now getting my popcorn and coke by my side. Eagerly watching how you will respond next ;)

      Ding, ding!

      Round 1!

      Delete
    3. Chinese said: Ten bald. Nine rich. Who is the unlucky 10th not rich?

      Delete
    4. "But it is very difficult to do it, for me psychology."
      It means i have taken the more risky way of Pyramid Down all these 26+ years.
      I thank GOD i still survive.
      i must force myself to learn to Pyramid up too.
      As it seems a safer way to invest.
      (At least i will not be killed by the proverbial falling knife during a Bear Market)

      Anyway no one way is always right even though it may seems to be a safer way.
      A company's business dynamics can change for the worse anytime. Need close to very close monitoring.

      Delete
    5. temperament,

      Exactly!

      I am just amused when CW used such Black and White language:

      "Never, never, ever average down!"


      Then came a testimony of doing exactly that "forbidden" action and having a 2 bagger ;)

      Where's the comeback?

      LOL!

      Delete
  2. Ah!
    Is this why financial books' authors say never average down but PYRAMID UP. By average up at least your purchased are always in the money. 5,4,3,2,1. Or even 1,1,1 ,
    But it is very difficult to do it, for me psychology.

    ReplyDelete
  3. I did apply average down strategy and it works!

    I believe in value investing and hence I only invest in company with good fundamental and with adequate safety of margin.

    When the stock price drop further than my buy price, it means that the MOS is higher. Why not buy more? Before i pull the trigger, I will doubly check if the company FA is deteriorating. If not, then shot.

    For example, I bought ChipEngSeng @42 cents with ~30% MOS. The price fell further down to 32 cents (down 24%) in the next 3 months. I bought more after reviewing the company FA.

    Now sitting on ~ 105% gain with 3 years 8% dividend. :)


    ReplyDelete

  4. Next time, when you seek advice or see your favourite bloggers, chatters, gurus or sifus in cboxes or stock forums who are buying more of the same beloved stock as you.

    Don't be fooled by that buying action of your sifu.

    Your sifu may be Averaging In; but you may be Averaging Down. Your sifu may be taking reasonable risk due to his portfolio size; but you may be taking too much risks and has ignored the importance of portfolio management for survival in a prolong bear market where there are many more other gems to be found. Diversification is a key survival for not so smart in the stock market. If you are the smart ones in the stock market then people should be following you. Right?

    BTW, one young man whom I know failed to appreciate it when I replied to his email; but has to learn this lesson through a more painful way.

    "Think of Risks before Profits" - Createwealth8888


    Read further? Bear market is here. Let's accumulate more by average down? (2)

    ReplyDelete
    Replies
    1. CW,

      LOL!

      Now that's it's murky and grey, I can join in with temperament to say I agree CW is the expert!


      One-liners are cute, easy to remember, and fun to use. But without fleshing out the context and perspective or verifying through the lens of our own experience, it can be like 2 persons in a car:

      Are you driving?

      I thought you were driving?

      No. I thought you were!

      Shit!

      Crash got sound....

      Delete
    2. Are you driving?

      I thought you were driving?

      No. I thought you were!

      No worry.

      This is Google Self-Driving Car test drive.

      Crash Got Sound!


      Delete
  5. "a prolong bear market where there are many more other gems to be found."

    You are definitely right. In fact just too much and too many gems for you to salivate over & bear ( aka limited by your money) in a BEAR Market.

    It's just like you are a boy in a candy store, you are bewildered by so many of your favorite sweets on display that you don't know what to choose first. You know your fund is limited but you can't help just buying, buying what you can see first. Then when your fund are exhausted, you will notice there are still so many more refine gems, how come you can missed them at all?
    i know it happens to me always.
    Not you?
    Good for you.

    This is the time if you average down it must be an average in too. What and where is the difference? Ask CW lol. He's an expert, i think.

    ReplyDelete

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