On the other board, someone talked about 'averagin
Post# of 1023
Posted On: 07/31/2016 6:53:34 PM
On the other board, someone talked about 'averaging up'. I agree with this concept.
In an older post I talked about the benefits of averaging up. You see, the majority of people in these boards brag about averaging down.
we read things such as, "Buying on the dips!" and "Just bought a million more". We hear these things, but how often do we read about these investors making big bucks? I personally believe many online investors live the life of owning millions and million of shares yet they never make a decent profit.
Averaging up on the other hand is what makes the price increase. When we average up, we show confidence in the company; which in turn interests new investors to investigate.
Sure, averaging down is fun because we get to own millions of shares, but in the end...owning a billion shares which ultimately never become worth something are just that... worthless.
Heres the original post from March of this year:
Not investment advice
In an older post I talked about the benefits of averaging up. You see, the majority of people in these boards brag about averaging down.
we read things such as, "Buying on the dips!" and "Just bought a million more". We hear these things, but how often do we read about these investors making big bucks? I personally believe many online investors live the life of owning millions and million of shares yet they never make a decent profit.
Averaging up on the other hand is what makes the price increase. When we average up, we show confidence in the company; which in turn interests new investors to investigate.
Sure, averaging down is fun because we get to own millions of shares, but in the end...owning a billion shares which ultimately never become worth something are just that... worthless.
Heres the original post from March of this year:
Quote:
Short term investors place extra burdens on companies because they are skittish about volatility. Unlike short term investors who base the majority of their investment decisions on the color of a candle, long term investors help create value.
Long term investors don't only try to average down, they try to average UP; meaning, they buy shares as the price goes UP. It's called Pyramiding. Google it. Its very interesting stuff. As the price goes up, they continually buy less number of shares for a higher price.
Why do investors average up? Because it only further enhances the value of the company. Whats the point in averaging down and owning 50 million shares in one company if you only buy as the price goes down? (There's nothing wrong with owning millions of shares; the point being its important to know when to SELL).
Many investors fall for the 'its a gift' thing far too often.
On the other hand, averaging UP increases the stocks visibility to more investors.
Many investors average down with the notion that they are getting shares at 'value' prices. They say things such as:
"Just bought another 100,000 on this dip!"
or
"These are gift prices! Get them while you can!"
I respect investors decisions to think like this, but for myself, the thinking is backwards. Averaging up reassures you that you found a great stock. Averaging down can actually hurt you because when you average down, your position keeps getting bigger, and if the stock never recovers, your losses will end up being greater than if you simply kept your original position.
The downfall for many investors is not knowing when to SELL. They stay in, watch the price skyrocket, but never sell thinking it will go higher. But the price crashes and end up taking a total loss. Those 50 million 'gift' shares are now worth nothing.
Not investment advice
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There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
Disclaimer:
As used herein, the terms "You" and "Your" shall mean you, individually, the reader, and each other party on whose behalf you may use the contained information at any time.
All references to "My", "I", and “The writer of the above post” shall refer to the creator of the username Joey68.
Do NOT invest unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges.
There is a very high degree of risk involved in trading and investing. Past results are not indicative of future returns. I assume no responsibility for your trading and investment results. You should NOT rely on the information in the above post to make any decision or take any action.
ALL OF MY STATEMENTS, including but not limited to, POSTS, MESSAGES, PRIVATE MESSAGES, and RESPONSES are OPINION and NOT fact and are for entertainment purposes only. Do your own research and make your own decisions based on your own conclusions.
ALL OF MY STATEMENTS, including but not limited to, POSTS, MESSAGES, PRIVATE MESSAGES, and RESPONSES are NOT advice, and are NOT designed to substitute the expertise and judgment of a professional. It is your responsibility to seek investment advice during all stages of your investments. It is your responsibility to evaluate the accuracy, completeness and usefulness of the information in the above post.
I am NOT a professional.
I do NOT work for you.
My posts are NOT investment advice. I am not paid to post.
There is no correlation between the number of posts I write per day and your assumed success of a company.
It is NOT my responsibility to inform you of my own personal investment decisions.
It is NOT my responsibility to inform you when it is time for you to buy, hold, and/or sell a position.
I have no control over, and am not responsible for the actions of others who copy, store, edit, change, prepare any derivative work of or alter in any way any of the content provided in my posts.
Errors and Omissions expected. The writer of the above post accepts no liability or responsibility for any errors or omissions contained in the above post or contained within this Disclaimer.
The writer of the above post shall NOT accept any liability for the accuracy or completeness of the information contained in the above post, for any reliance placed by any person on the information contained in the above post, or for any damage or loss, however caused, in connection with the use or reliance on any information contained in the above post.
The above post may contain links to websites owned and operated by third parties. These links are provided for informational purposes only and are NOT endorsed by the writer of the above post. The writer of the above post has no control over the contents of any linked website and bears no responsibility for the accuracy, legality, or content of the external site or for that of subsequent links.
YOU ACCESS ALL LINKS ENTIRELY AT YOUR OWN RISK.
The writer of the above post makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, or the information contained on these websites.
The writer of the above post accepts no liability for any damage or loss, however caused, in connection with the use of or reliance on any information, material, products, or services contained on or accessed through any such linked websites.
There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
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