I don't know if anyone here has read The Market Wizards (2 volumes) by Jack Schwager, my favourite book on the markets. Several of the wizards (i.e. traders with extraordinary track records) say that one of the stupidest things to do, sure to do you in in the long run, is to average down. I keep thinking about doing that with WSP, but in fact I did average down some at around $1.47 many months ago. Luckily, I sold those shares for the same price I paid- otherwise I'd have a shitload of shares with a 45% loss, instead of the bigger shitload of shares with about a 70% loss.
I guess the questions to ask, are : 1. Do I trust the management of WSP (NO!!!)
2. Is the geology good? (Seems that way, but it's a "speculative stock)
3. What is the market action telling me? (That the geology doesn't look all that great to the multitudes of investors who are quite willing to decline market offers to dive in at 75 or 80 cents)
4. What is the potential downside? (Anyone got an answer to that quesion? It's probably the most important question to ask oneself)
Well, if a good pipe is discovered, I'd hope the price would get to a new all time high, in which case I'll do all right - make 100% or more, I figure. If it's hype and none is found, I guess I'll be glad I didn't average down. |
