SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Gorilla and King Portfolio Candidates
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: H Peterson who wrote (35320)11/27/2000 12:35:43 PM
From: StockHawk  Read Replies (1) of 54805
 
I was sending money in to my on-line account weekly to duplicate the 401K I had pulled out of. When QCOM started to drop in the spring, I made the decision to keep buying on the down slope to average down. On 8/28/00 I decide after being 100 % invested in QCOM with 27 shares to sell...

Hello H, I hope you will not mind if I offer up a few observations on your experience here. I am mindful of the fact that I'm Monday-morning-quarterbacking, but I think what you presented can be a learning experience for many.

What you wrote is just about the text book case on why dollar cost averaging works, and why it does not work.

Dollar cost averaging works, in theory, because it forces you to buy more shares when the share price is low, and fewer shares when share prices are high. The result is that volitility is your friend and even a stock that only partially recovers from a fall can still be profitable.

The reason dollar cost averaging fails, in practice, is because many people give up on it when the share prices are down. Precisely when they should be loading up, they are bailing out.

To my mind your experience points to two possible mistakes:

1. You did not stick with your plan.

2. By placing 100% of your investment in just one stock, you made it just too difficult to stick with your plan. The risk that the one chosen stock may not recover is just too much to bear.

StockHawk
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News