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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Boa Babe who wrote (16689)	1/28/2000 1:06:00 PM
From: mauser96	Read Replies (1) \| Respond to of 54805

Mainly because of the psychology. It's hard not to have an "ownership bias". Presumably you own the stock because you're bullish, ie you tend to see the glass as half full rather than half empty. Once you own something, it tends to become "your stock", maybe compounded by telling others about it. If you buy more, it allows you to delay admitting you were wrong. This is even harder if you have to admit you were wrong to friends. People who have never owned the stock don't suffer from this emotional overload, and are thus more likely to make more rational decisions. No matter how aware you are of these factors, they still may influence you on a subconscious basis so after several painful experiences I just follow the rule "don't average down". There are other stocks "on sale" if you have excess funds and want to invest. All IMHO only.

To: Boa Babe who wrote (16689)	1/28/2000 3:08:00 PM
From: freeus	Respond to of 54805

re averaging down Every case is individual... The problem is that often when a stock is going down the company is becoming less and less profitable and is going to stay down permanently. This happened for example with Boston Market, even as it had a product people liked and enjoyed. But when you have a fine company whose report has been misunderstood, and when you believe that the company has strength and that strength will return to the stock too, you will do well to buy more at a lower price. In fact, that's one of the reasons for "regular buys"...you buy at many prices. I held (and hold) Janus 20 last year: I told a friend about it before it closed and he bought in: he didnt have enough money to meet the minimum and Janus has a plan where you can begin with a small investment if you committ to investing at least $100 a month until the "minimum" is met. During the year the investor bought shares at $63, $65, $57, etc etc and so forth. Last time I looked the shares were in the $80 range. So the shares bought when the price was down made a greater return. But not on Boston Market. So it depends upon the stock...and, as another poster mentioned, on never "marrying" a stock and buying as it goes down because of that. Freeus

To: Boa Babe who wrote (16689)	1/29/2000 7:27:00 PM
From: John Stichnoth	Respond to of 54805

Kay, a slightly different take on "averaging down"--One pro investor I saw said he never averages down unless the stock has declined at least 20 pct from his buy-in price, because his weighted average cost would not change enough. In any case, as noted in other responses to you, the argument against is: If it has fallen from your buy-in price, there may be something negative about the company that you don't understand or don't know. Caution is in order when the price is moving for reasons not apparent. I do not think that applies to the Q. We can explain the dip by the exit of the momentum investors all at once, and by the general market move. We know the fundamentals of the company. And (as noted upthread) we can be confident that the Street didn't read the quarterly correctly. They're wrong. We're right. <g> One thing about being a GGamer, our point of view is different from most buyers and sellers. We have a longer outlook. When we buy a true emerging Gorilla--as contrasted with a maturing Gorilla (Cisco?) or a Gorilla candidate (Gemstar?)--we are doing so with the expectation that we (1)will hold it for 10 years, and (2) don't have to be worried about diversification. Or at least, that's the Manual's assumption. Think of all those fund managers, who have to worry about (1) quarter to quarter results, and (2) getting rid of winners that win too much! They're going to cause volatility for us, but they can't disturb QCOM's long term fundamentals. [Hey, this was supposed to be a one-sentence post!] Best, John