Averaging ...

NEM · 1 Averaging ... Wed Nov 09, 2011 1:27 pm

NEM

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It is said that averaging is not a correct strategy in investing. What are the reasons for that?

wikum100 · 2 Re: Averaging ... Wed Nov 09, 2011 1:31 pm

wikum100

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NEM wrote:It is said that averaging is not a correct strategy in investing. What are the reasons for that?

cant you see it now ?
i am avaraging dfcc from 160 to 118 i dont the end?
i am avaraging lolc from 122 to 88 i dont know the end ?
i am avareging kgl from 188 to 115 and i dont know the end ?
i am averaging samp from 250 to 210 i dont know the end?
now you see why ?

NEM · 3 Averaging ... Wed Nov 09, 2011 1:40 pm

NEM

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wikum100 wrote:

NEM wrote:It is said that averaging is not a correct strategy in investing. What are the reasons for that?

cant you see it now ?
i am avaraging dfcc from 160 to 118 i dont the end?
i am avaraging lolc from 122 to 88 i dont know the end ?
i am avareging kgl from 188 to 115 and i dont know the end ?
i am averaging samp from 250 to 210 i dont know the end?
now you see why ?

Actually there may be a lot of individual stories about averaging. There may be some opposite stories as well who succeeded by averaging.
I know followings are disadvantages of averaging
1.You dont know the depth
2.You miss a chance to diverse your portfolio
What are the others?

prasadrmb · 4 Re: Averaging ... Wed Nov 09, 2011 1:53 pm

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As I heard, it is not advisable to average in bearish market like this nature because you do not know where it ends (acting like no limits).

tkc · 5 Re: Averaging ... Wed Nov 09, 2011 1:55 pm

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If we want to average , we should identify the depth.It is really hard to identify. But when market recovers if we can see a positive momentum with a share , we can average that particular share.We should not average if we feel that downward momentum will continue....

sriranga · 6 Re: Averaging ... Wed Nov 09, 2011 2:13 pm

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Please read this link may be helpful.
http://forum.srilankaequity.com/t6611-averaging-the-buy-price-to-minimize-risk-a-common-mistake-of-stock-traders