Quote:
Originally Posted by GregWeld
Averaging down is a very good way to work out of a "problem" stock.... IF -- it's a stock you don't mind owning for awhile. I've done this zillions of times and most of the time it's worked out real well.
One time I averaged into a 93,000 share position that eventually cost me a $1.00 per share loss.... I was trying to save an $8,000 (total) paper loss in the position. That was extreme -- but was worth the loss for the education it provided!  |
Yes, it does normally work but it's important that the size of the position stays in check to the rest of your portfolio. SAN was starting to "stand out" i guess you could say as a percent of my portfolio. That is where I started to get nervous - as even though I don't mind holding on to it for the next 25 years, I don't want to lock up that much of my portfolio for that long. At one point it was almost 15% of my portfolio!
So I've since averaged out of the position and parked that money elsewhere for other opportunities....