Month: May 2017

“If you let a stock go down 50% from where you bought it, you must make 100% on the next stock just to break even. Now, how often do you buy stocks that double in price?” –William J. O’Neil, MarketSmith Founder

Investors are often reluctant to sell when stocks go down in price from what they paid for them. To add to the harm, many investors tend to average down and buy more of the stock that already shows a loss. Our strategy turns the concept of averaging-down on its head, and we suggest adopting the pyramiding or the averaging-up technique. This strategy ensures that the losers are weeded out, and the capital is instead deployed to winning stocks – resulting in averaging-up your initial buy price. In general, three out of four stocks follow the market direction.

Continue reading “Should you Average it Up or Average it Down?”