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Gold/Mining/Energy : MONETA PORCUPINE ME.t
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To: Crocodile who wrote (285)8/26/1997 4:07:00 AM
From: D LEE   of 440
 
in the broader picture: averaging down continued

i also like to keep in mind that a good rise in a stock
price meens that it might be temporarilly inflated.
the danger of riding "the swinging door" back down
can be controlled somewhat by realising -
what your holding position is truely offering you
in terms of all other stocks.

a simple example of this reasoning might be:

if your stock has just doubeled, you can essentially
get twice as many shares of any other
stock as you could have exchanged it for "yesterday".

from the stand point of this special investment alone,
all other stocks now seem to have gone through
a "black friday"!

this is no time to give thanks by loving the stock.
leave it and turn your attention to some other stock
which your research has indicated is down and ready
for "its" upward swing. perhaps this could be viewed
as averaging down into another stock.

by using comparrisons, it can be quite a
suprise to realise how effective
you might become at maximising both the number of shares
you hold, and preserving your value gains per share as well.

a tool i like which allows you view this graphically
is a sort of comparrison charting,
where both stocks start as "equal"
on the day of your choice.

as a short time goes by the spread can increase dramatically.
the goal is to exchange overvalued for
undervalued as the stocks vacillate independently.
avoid stagnation and try to preserve the
value of the upward swings by selling
when most people would be saying:
"why should i sell, the stock is doing fine"

the whole point, is to allow yourself senarios
that don't require you to put extra money into the market.
that increase your market activity.
that increase the number of shares you hold,
and that preserve any good value gains per share
that you have enjoyed.

thanks, bev, for a good topic to chat about.

dave
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