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I averaged down on SUPC last year .. It had fallen about $10 to the high
30's when I entered.. fell to 30 so I bought another K and then to 20 where
I added another K. This company had great earnings and was in the business
of hospital management which to me, was a growing field and was desperately
needed in America. Two days later, the company reported irregularities in
their books before the open and it opened at $10 as I recall. Just a note
about an averaging down nightmare. The company knew, the employees, (to
some degree), knew and who knows how many employee friends and relatives
knew? I'm not saying that all averaging down is a bad thing but one needs
to clearly understand the reason for a fall in price and if you don't, stay
clear. (At least that's my new motto)
(Fortunately, shortly after this mess I bought 2K of GERN at $12 and sold
it at $68 and $72 so recovery was short but highly mitigated by my
averaging down escapade).
People might want to read Abby Joseph Cohen's remarks or listen to them on
the CNBC web site. She was widely credited for the current over all slide
and she is now saying that she maintains her projections for the DOW and
the NASDQ, adding that she is still bullish and the current drop is a
market condition and not an economy event. That, along with heavy
capitulation last week and heavy volume Friday causes me to believe that
after some possible margin call selling early Monday, we may well have
found a floor. I admit the DOW has not dropped heavily but it did recently
and if the NDQ keeps falling at the rate it is, we will be at 0 in three
weeks. :)) I covered all my shorts at 3:30 EDST yesterday.
Good trading ..
Bob
At 11:37 AM 4/15/00 -0500, Michael Ferguson wrote:
>Long term to me is more than ten minutes. I do not think I have a seventy
>year time horizon for my portfolio. Now that we have derivatives for hedging
>I wonder how the buy and hold might have fared?
>
>The best crack I heard all week was: Those 401Ks are now 210Ks.
>
>
>Michael
>
>
>
>----- Original Message -----
>From: "Dennis Holverstott" <dennis@xxxxxxxxxx>
>To: <realtraders@xxxxxxxxxxxxxxx>
>Sent: Saturday, April 15, 2000 10:25
>Subject: [RT] Dollar Cost Averaging
>
>
>| Preface - I'm not talking my book here. I don't own any stocks. I'm a
>| short-term index futures trader. Long-term to me is a week and I never
>| average down.
>|
>| All this talk about scale trading and averaging down, along with this
>| week's crash, got me thinking about the way many people invest in the
>| stock market - dollar cost averaging. Lots of people with 401K plans
>| just contribute an equal amount every week or every month to a mutual
>| fund.
>|
>| We all know what happened in the 1929 crash. The Dow hit its high in
>| August 1929, crashed 90%, and didn't return to the 1929 high until 25
>| years later in 1954. So I wondered what would have happened to our 401K
>| investor if he had been unfortunate enough to open his account at the
>| August 1929 peak and had the balls to stick with his equal weekly
>| contributions over the years.
>|
>| The gif shows the results. I calculated the profit/loss by comparing the
>| average cost paid for a Dow share to the weekly Dow close. Not a pretty
>| picture but not as grim as the 25 year scenario might lead us to
>| believe. I think it shows the value to a _very_ long-term investor of
>| buying more shares when they are cheap and buying fewer when they are
>| expensive.
>|
>| --
>| Dennis
>
>
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