Q: Peter and Team,
Can you post the definition to "Averaging Down" ? I often set myself up so that I gradually get into positions by, say, starting with a postion in a stock that is 2-3% of the portfolio and work my way up to 5%. If one does this and tries to make the second, third, etc. purchases on dips does this mean you are averaging down or simply staging entry?
I always understood averaging down to be defined as taking full portfolio position and then buying more if the stock goes down meaning if it returned to the original purchase cost it would now be more than 5%.
This is probably a confusing note, but I think there is confusion on the meaning of this term.
Can you post the definition to "Averaging Down" ? I often set myself up so that I gradually get into positions by, say, starting with a postion in a stock that is 2-3% of the portfolio and work my way up to 5%. If one does this and tries to make the second, third, etc. purchases on dips does this mean you are averaging down or simply staging entry?
I always understood averaging down to be defined as taking full portfolio position and then buying more if the stock goes down meaning if it returned to the original purchase cost it would now be more than 5%.
This is probably a confusing note, but I think there is confusion on the meaning of this term.