SKO - Serko.com

[t.rexjr]

It is always wrong to buy stock based on the current holdings (with the exception of following a diversification strategy). Averaging up (as a strategy) is as much nonsensical as averaging down.

It is easy to buy an up-trending stock (averaging up) too dear (just look at all the hype peaks in our well known growth stocks - e.g. talk with the people averaging up ATM at $17) and it can be amazing efficient to "average down" on a stock which just reached their all time low (buying Serko below 30 cents was clearly clever, no matter how many shares the SH already owned.

The only thing which does matter is the future development of the stock you are buying ... and this is absolutely uncorrelated to the amount of shares you already hold - and it always lies in the mist of the future ;

Only with the benefit of hindsight will we be able to assess whether "averaging up" Serko at this stage will be a clever idea ... but I can predict that the outcome (whatever it is) will be absolutely uncorrelated to whether the buyer was averaging up, down or just buying new ...

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)

[BlackPeter]

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)

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" ;

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 ;

[percy]

In fact, there's everything wrong with averaging down as a strategy (you are buying more and more of a bad story) and everything right with averaging up (you are buying more and more of a good story).

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.

[Schrodinger]

Mmmm interesting, but I beg to differ.

I decide on a company (stock) to add to my portfolio (using a mix of TA and FA,) and then purchase in increments over time. I never buy a holding all at one time just in case I've timed the market wrongly.

I tend to buy only up trending stocks that are outperforming the NZX50 and show signs of continuing to do so. I buy more as the SP increases (averaging up,) all the while ensuring my average holding price is well below the current market average (giving me what I call is my protective moat.)

On very rare occasions I have even averaged down when I perceived the market had irrationally marked down a share that I owned. This tactic worked well for me with both XRO and ATM.

JMHO. DYOR and be accountable for your own decisions.

I like your strategy - makes sense. Most my big wins have been from averaging down...

[silu]

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.

[sb9]

Likely to drift down as people cash up to buy cheaper one would guess - depends if the instos are keen to keep accumulating or are happy to sit back for a bargain.

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."

[silu]

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."

Wouldn't it be great if some holders sell shares now in the hope to pick up some cheap ones in the SPP but then miss out and have to buy back on market!? Even more of an incentive for anyone holding to apply for the full 15k.

[Leftfield]

I'll be going for my full entitlement....

[sb9]

Wouldn't it be great if some holders sell shares now in the hope to pick up some cheap ones in the SPP but then miss out and have to buy back on market!? Even more of an incentive for anyone holding to apply for the full 15k.

Its a good bait they put in for existing shareholders, may see some selling by retail holders after SPP shares are allocated.

[sb9]

I'll be going for my full entitlement....

Same here, making room for funds over next week or so.