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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Broken_Clock who wrote (21455)	6/15/2005 12:13:21 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78856

I'd guess it's roughly like this for me: Consider a well-diversified portfolio. It fluctuates every market day. Consider its average daily fluctuation over the past two months. Call it X dollars. Generally, but not always, I decide in advance of buying my first shares whether I am going to add more shares if the stock drops or else if I am going to add more shares if the stock rises. Normally, I am a person who prefers to average down (i.e. add to position if stock drops and make no adds if stock rises). "A bit" and a "few shares" would be buying those shares amounting to a dollar value where, if the stock collapsed to near zero, the effect on the portfolio would not be noticeable. That purchase amount might be .1 or .2X dollars - however many or few shares that might buy. An "exploratory" position would be more - maybe .3X dollars or more to start a commitment, with the intent to add in increments. Starting a small position might be one day's average portfolio fluctuation committed to a new purchase, i.e. X dollars. As an example, I have posted several times that I continue to buy a few shares of YBTVA. And I continue to lose money on each purchase. Buying these shares over time, I've cumulatively not felt any effect of these losses on my portfolio or psyche. I'm not happy about the losses of course, but they are passed, and they are built into my portfolio value now. Even if the stock drops to new lows, I assume the drop will still likely amount to much less than one day's average portfolio fluctuation (assuming the portfolio/market doesn't collapse also at the time that YBTVA does). In other words, my losses haven't been large enough or painful enough to shake me out. In fact, if the stock hits new lows I am still willing to add a few more shares (bet .1-.2X dollars more) on the company.