trebeg, You have been pretending to ignore me for a while now. Only you believe that you are fooling anybody.
It is true that averaging down is a fools game, but that applies mainly to stocks trading on the major exchanges. In pennyland it is a completely different ballgame. Averaging down can reap enormous profits since the risk/reward factor is so great.
This is abject nonsense.
The REASON that averaging down is a fools game is precisely because of the risk/reward factor. In pennyland the risk is so much greater that the fools who play the game in pennyland hold a special exalted place in the fool hierarchy.
The REASON that averaging down is so stupid is that there is NEVER anywhere on the downslope that it makes any sense to 'buy in'. As soon as the pps drops more, the you are just deeper into a losing proposition. The ONLY place that it makes sense to purchase new shares is at the BOTTOM. Unfortunately guessing the bottom is the same thing as chasing the pps down. Here is the 'key' for the non-stupid investor. YOU KNOW YOU HAVE REACHED THE BOTTOM ONLY AFTER THE PPS STARTS TO GO UP!.
The RISK of averaging down in pennyland is that in pennyland there is a HUGE possibility that the pps will NEVER go back up.
On the other hand if it ever DOES start to go up, you can easily get on board and recoup your losses, even make a profit, AFTER the pps starts to rise. Here's another clue for the slow witted. It is almost impossible to lose money when the stock price is going up. Conversely it is very difficult to make money when the pps is going down. (Unless of course you are on the receiving end of the transaction, i.e. DNAG management.)
Those fools drawn into 'averaging down' are merely playing into the hands of those that live off the trusting nature of the naive.
trebeg, You'd better pretend to put me back on ignore. Although it makes you look ridiculous, it prevents you from making a bigger fool of yourself by arguing with me.
regards,
frog
