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Microcap & Penny Stocks : NAMX -- North American Expl.-- Que Sera Sera! -- Ignore unavailable to you. Want to Upgrade?

To: ODLAW who wrote (3257)	4/2/1998 4:36:00 PM
From: Hunter Vann	Read Replies (1) \| Respond to of 4736

Averaging down is pretty simple: Say I bought 1000 shares of NAMX @ $10. My total investment is $10,000. Say the stock subsequently dropped to $5. My investment now is worth $5,000. So, in order for me to break even, the stock would have to return to my original purchase price. Averaging down would simply mean that you would buy the stock at different decreasing price levels. If you were to buy another 1000 shares at $5, then your total investment would be $15,000, at an average price per share of $7 1/2. So instead of the stock climbing back to $10 for you to be able to break even, the stock would only have to go to $7 1/2. You're simply decreasing your costs basis but more importantly you're increasing your net investment, thus risking more capital.