There's a simple saying you hear and that's 'never buy into a down trend'. Even if it's "the best stock ever". It's a pretty good rule if you're anti losing money. (also known as don't buy more of a bad story)
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Sure - and this simple saying stands (as many others) sometimes the test of hindsight - and sometimes it does not.
I made some of my best deals buying good companies in the red ... good business to buy good companies during down trends (when they are cheap) and sell them during up trends (when they are dear). Just applying the simple saying "buy cheap and sell dear" :p;
The truth is - it always depends ... on circumstances not known to the buyer (or respective seller) at trade time. Of course ... one can (and should) do a risk assessment, but this is more then just looking at the trend.
That's the reason why so far nobody got rich just by applying "simple sayings" - if it would be that easy everybody would do it and it would not work ;);
Agree.
Add to your winners,sell your losers.
Whenever I want to add to my strongest shares, I find the funds from selling my weakest shares.
I also prefer adding to companies I already hold.
However I have also done very well adding to "strong conviction" shares such as HGH in downtrends,Buying any share in a down trend, you must understand the company better than "the market" or "loud posters" on ST..lol.
I actually had a quick look through my portfolio and the only share I've averaged down in the last 10 years was actually Serko which I have bought at IPO $1.10 (my biggest parcel) then at 76c and 35c.
I have different strategies for different companies. I own quite a few speculative stocks where I start really small and then add on if I like the message through SPPs or on market (like ATM, GNX.ASX, XTE.ASX). Some go bust but then the losses are small.
Probably won't happen that way, as they may miss out on cheaper ones due to following as per SPP docs :
"If Serko receives applications in excess of NZ$5.0 million, it will scale back all applications on a proportionate basis in accordance with the number of Serko Shares held by the Applicant (or, in the case of an application made by a Custodian, the relevant beneficial owner(s) named in the schedule submitted with the Application Form) on the Record Date. The board of Serko believes this is the most equitable manner in which to deal with applications in excess of the funds required under the SPP."
I'll be going for my full entitlement....