How would averaging down work in a Dividend Reinvestment Plan (DRIP)? Say you know that Safaricom needs to buy shares using your dividend cheque (a DRIP). I'm sure they'll buy shares at a (market) discount as it is, not from market issued shares but from Treasury stock, but should they average down further as a matter of policy to add greater value?
Are the purchases in the DRIP at the discretion of the investor, where they can make the decision to average down? We are investing earned income to make compounded returns, so this is not new capital, an already sunk cost. Does this strategy then make sense?
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden