http://www.financialsensenewshour.com/broadcast/fsn2012-0512-3.mp3 thought this might be helpfull for some people who (like me) are really trying to keep possitive in a gut wrenching correction. Buying a gold stock cheep when Gold was 1700 felt great, now the retracement of the metal has made my stock which once was cheap - now seem like I paid too much. Is what was cheap last year going to work out for me? My example is Newcrest - worked hard got a good price - then some bad luck and a downgrade took me from a purchase price at the bottom or 'buy' zone of a distribution, to a purchase price now advertised as the 'sell' zone for some analysts. Now im trying to intelligently cost ave down with not as much capital as i'd like. Maybe this podcast can help me have patience and even a little courage.
I have never understood this strategy? And I NEVER do it. To me, pouring more money into a losing trade is worse than cutting loses and running? If your veiw has not changed since the intitial purchase, then there is nothing to worry about. If your veiw has changed, then this implies you no longer veiw it as a buy, and therfore you should sell - not buy more? Am I missing something? Or is this strategy an attempt (punt/gamble) to average down until (hopefully) price turns enough to get out square - most likely at a level where the initial stop loss should have been placed anyway? I am not dumping on your strategy, but sincerely trying to understand the logic behind it. wrcmad
1. Im not trading, im investing - accumulation phase is when the market is like this - the goal is to get as many shares as i can for the least money. I have a basic core possition numer of shares and the shares over that amount are the tradable portion of the investment. I have many of my core possitions already so i wont be selling that. 2. One of the sure ways to lose money in the markets is to buy and sell often - the less you buy and sell the better mathematical chance you have of actually making money. I am an aweful market timer - been trying to get better bt the gambling would be for me to buy and sell and ave down that way. I only have a little investable capital left so I am classically a bad timer of the market - to get maximum difference this time i need to time it well for maximum impact.
I bought LYC at 1.5 in 2010 - it came back to 1.15 i bought all the way dwn. After that i rode LYC all the way up to $2.5 took my shares of the purchase plan and sold em all at $2.15. Any bull market either in an individual stock or an entire sector - the mistak many people make is obsessing over price "it will go lower" - so what downside % is less than up side potential %.
