AI
Wednesday, December 15, 2021 12:41:14 AM
'I'm planning on buying more'
That would remain inadvisable. Averaging down is a classically badd strategery in pennystocks, and particularly badd in AMFE/FUNN/FUNNQ as the regression line shows:
Data - hard, painful, portfolio-crushing data - current to Tuesday's close (YES, another daily 52 week low)
https://www.investors.com/how-to-invest/investors-corner/averaging-down-is-a-weak-strategy/
'Averaging Down
Averaging down is typically used by investors who have made a mistake already, and they need to cover their error. For example, if they bought the stock at $3.50, and it drops to $1.75, they can make that mistake look a little bit less awful by purchasing a whole bunch more shares at this new, lower price.
The result is that now they've bought the stock at $3.50, and more at $1.75, so their average price per share is much lower. This makes their loss on the stock appear far smaller than it truly is.
However, what is really happening is that the individual bought a stock that dropped in value, and now they are sinking even more money into this losing trade. This is why some analysts suggest that averaging down is just throwing good money after bad.
Averaging down is typically used as a crutch to help investors cover the mistake they have already made. A more effective strategy is to average up, where you purchase more of a stock once it starts to move in the direction you are anticipating. The share price activity is confirming that you made a good call.'
Averaging down in pennystocks is just being a gambler chasing their losses. Compounding a mistake - rebetting a badd bett that is losing. Doubling down on 16. Splitting 7s. Betting the Horn. That is all it is.
That would remain inadvisable. Averaging down is a classically badd strategery in pennystocks, and particularly badd in AMFE/FUNN/FUNNQ as the regression line shows:
Data - hard, painful, portfolio-crushing data - current to Tuesday's close (YES, another daily 52 week low)
https://www.investors.com/how-to-invest/investors-corner/averaging-down-is-a-weak-strategy/
'Averaging Down
Averaging down is typically used by investors who have made a mistake already, and they need to cover their error. For example, if they bought the stock at $3.50, and it drops to $1.75, they can make that mistake look a little bit less awful by purchasing a whole bunch more shares at this new, lower price.
The result is that now they've bought the stock at $3.50, and more at $1.75, so their average price per share is much lower. This makes their loss on the stock appear far smaller than it truly is.
However, what is really happening is that the individual bought a stock that dropped in value, and now they are sinking even more money into this losing trade. This is why some analysts suggest that averaging down is just throwing good money after bad.
Averaging down is typically used as a crutch to help investors cover the mistake they have already made. A more effective strategy is to average up, where you purchase more of a stock once it starts to move in the direction you are anticipating. The share price activity is confirming that you made a good call.'
Averaging down in pennystocks is just being a gambler chasing their losses. Compounding a mistake - rebetting a badd bett that is losing. Doubling down on 16. Splitting 7s. Betting the Horn. That is all it is.
