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guru267
#11 Posted : Tuesday, October 26, 2010 6:55:12 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
Kaffir wrote:
If the price drops, and i still think its a good investment, i buy it, not to average down my earlier purchase but because it is a good investment. I look at each purchase as a separate investment, made based on prevailing info


@Kaffir the only problem with not considering new purchases as an average down is that when the stock begins to rise your profit calculation will be wrong and your loss calculation will also be wrong if it falls
Mark 12:29
Deuteronomy 4:16
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2012
#12 Posted : Tuesday, October 26, 2010 6:57:19 PM
Rank: Elder

Joined: 12/9/2009
Posts: 6,592
Location: Nairobi
guru267 wrote:
@2012 sometimes your stock may be falling for a non fundamental reason and thats your chance to get it at a bargain and bring the average buy price of the total holding down ready for it to appreciate again..


But that is not averaging down, it's increasing your investment. Averaging down to me implies that you want to break even and get out also implies that you're speculating. I always increase my share of Kenya Re every time it goes down, I even got some yesterday @11.40/- and I wasn't averaging down.

This averaging down is how guys end up buying Access @ 40/- then average @35/-, 30/-, 25/-, 20/-, thenPray

BBI will solve it :)
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guru267
#13 Posted : Tuesday, October 26, 2010 7:03:50 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
2012 wrote:

But that is not averaging down, it's increasing your investment. Averaging down to me implies that you want to break even and get out. I always increase my share of Kenya Re every time it goes down, I even got some yesterday @11.40/- but I wasn't averaging down.


@2012 you were averaging down when you were buying kenya re...

if you buy kenya re with 10k shares with 100k that is an average buy price of 10bob

If the share falls to 7 bob and you inject 100k more to get to get 14.2k shares..

Your total shares are now 24.2k shares with a total investment of 200k

divide this and you get a new average buy price of 8.2
Mark 12:29
Deuteronomy 4:16
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Kaffir
#14 Posted : Tuesday, October 26, 2010 8:09:54 PM
Rank: Member

Joined: 5/8/2008
Posts: 77
guru267 wrote:
Kaffir wrote:
If the price drops, and i still think its a good investment, i buy it, not to average down my earlier purchase but because it is a good investment. I look at each purchase as a separate investment, made based on prevailing info


@Kaffir the only problem with not considering new purchases as an average down is that when the stock begins to rise your profit calculation will be wrong and your loss calculation will also be wrong if it falls


My profit / loss calculations are based on trades, not stocks. I dont care what stock it is (whether it is in my portfolio or not), but each trade is treated separate based on prevailing info. Then, i dont need to think of 'averaging down' as an investment concept. I avoid getting married to a stock, or the emotions start to creep in.
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the deal
#15 Posted : Tuesday, October 26, 2010 8:28:35 PM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
@kaffir do u knw what ur name means???
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Ilikeyou
#16 Posted : Tuesday, October 26, 2010 8:30:26 PM
Rank: Member

Joined: 11/21/2007
Posts: 152
Location: Nairobi
Iam also hoping to average down at around 10 or so.
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VituVingiSana
#17 Posted : Tuesday, October 26, 2010 9:06:21 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,349
Location: Nairobi
the deal wrote:
@kaffir do u knw what ur name means???
Depends... But both are derogatory... In SA, definitely derogatory...


Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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PKoli
#18 Posted : Tuesday, October 26, 2010 11:03:10 PM
Rank: Elder

Joined: 2/10/2007
Posts: 1,587
Ilikeyou wrote:
Iam also hoping to average down at around 10 or so.


If you have an opportunity to get MSC at around 11 bob, you should consider adding a few. You might have to wait a little longer to get anything and 10 and below.
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