If I had already owned the stocks, I would sell them back down to the constant value ($2000). Since I am buying them as new positions, I am buying $2000 worth.
So, whether they are new or existing positions, I would still have $2000 worth of the stock.
Even though CE and DEO are above their lows, I think they are still undervalued, so I think it is ok to add them as positions.
My goal with analyzing stock picks is to identify good companies whose stocks are either value or gaarp (growth at a reasonable price). I'm probably not as strict with trying to buy at the lowest price as other contrarian traders might be, because I trust the STR system to correct the position over time through constant value rebalancing.
At the portfolio level, I consider my system contrarian to the extent that I would expect to be 100% invested at market bottoms (like I was at the end of 2008) and at maximum cash when stocks peak.
In this case, after rebalancing, I found myself with more than the maximum (30% cash). I needed to buy 6 positions to get my cash balance down to 30% of the account. If this was truly an overvalued market, I would have had a hard time finding 6 reasonably priced positions.
