Averaging down is a bad strategy. It means buying more of a losing stock after a significant price drop to bet on a price turnaround. Buying more stock at a lower price lowers the average cost of those shares when there is a meaningful increase in the overall investment. But the total investment remains underwater, the portfolio shrinks, and the account performance also declines. As well, the market record shows most losing stocks sit as dead money until meaningful change happens. Most often that includes refinancing that dilutes shareholders. And that can work against their breaking even or ever profiting. In contrast, wise investors just sell on a critical price drop to avoid all that. They revive dead money by buying winning stocks to grow their portfolio."
Roaluceps - (1/28/2023 5:20:02 PM)
RE:RE:What a (continued) disappointment...
quinlash wrote:If your current average is $400 per share and you are still holding the stock then you must be thinking there will be better prices at some point in the future. If that is indeed the case then take a look at what your new average would be if you added 10 / 20 / 50 / 100 (etc) shares to your current holdings at recent pricing. Compare that new average to your $400 per share average and consider WHEN the SP might hit the new lower average and when it might hit your current $400 per share average.
Once the SP hits (or exceeds) your average you will have the option to do a partial sell to reduce your cash in play. Any rebalance over your average will actually drop your overall weighted average to a new lower average. Run the numbers in a spreadsheet to see how various scenarios would play out.
Don't add if you are not sure and don't get into playing with dollar amounts so large that you will get emotional over it.
All the best
Q
Never average down with a pre-bankruptcy company.
Rotaluceps - (1/28/2023 5:20:02 PM)
RE:RE:What a (continued) disappointment...
quinlash wrote:If your current average is $400 per share and you are still holding the stock then you must be thinking there will be better prices at some point in the future. If that is indeed the case then take a look at what your new average would be if you added 10 / 20 / 50 / 100 (etc) shares to your current holdings at recent pricing. Compare that new average to your $400 per share average and consider WHEN the SP might hit the new lower average and when it might hit your current $400 per share average.
Once the SP hits (or exceeds) your average you will have the option to do a partial sell to reduce your cash in play. Any rebalance over your average will actually drop your overall weighted average to a new lower average. Run the numbers in a spreadsheet to see how various scenarios would play out.
Don't add if you are not sure and don't get into playing with dollar amounts so large that you will get emotional over it.
All the best
Q
Never average down with a pre-bankruptcy company.