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Strategies & Market Trends : Value Investing
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To: Joseph G. who wrote (4889)9/6/1998 2:25:00 PM
From: Allen Furlan  Read Replies (2) of 78507
 
Interesting analysis of buying too early. But do you never ever buy? Lets look at your example of a 100 dollar stock declining to 11 or a loss of 89%. If you buy at 80 and each 20 dollar increment downward and then assuming the world doesnt come to an end you have the opportunity to buy at 3 dollar increments on the upside to 24 you will see that you will have a slight overall profit even though the 100 dollar stock is only 24 or 76 % off the peak. Dollar cost averaging does work and it permits you to take a more sanguine view to a markets volatility.
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