Comments on: The Worst Mistake that a Trader Can Make: Average Down http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/ Learning and sharing investment knowledge. Mon, 13 Oct 2008 00:34:16 +0000 http://wordpress.org/?v=2.0.4 by: jjj000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-252698 Wed, 30 Jan 2008 02:02:13 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-252698 I just read this whole article out loud using a really thick asian accent and it was really hilarious. I am going to hell now. Bye. I just read this whole article out loud using a really thick asian accent and it was really hilarious.

I am going to hell now. Bye.

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]]> by: Nikhil http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-150515 Thu, 06 Sep 2007 13:06:44 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-150515 With averaging down, as you mentioned rightly, its an emotional battle you are fighting with you mind refusing to accept defeat due to its ego. Very nice article! With averaging down, as you mentioned rightly, its an emotional battle you are fighting with you mind refusing to accept defeat due to its ego. Very nice article!

]]> by: Nathan http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-4302 Sun, 03 Sep 2006 03:15:07 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-4302 Jim, I think you got it very well now. You've done a great summary. Few people beat market in the long term indeed. Nathan Jim,

I think you got it very well now. You’ve done a great summary. Few people beat market in the long term indeed.

Nathan

]]> by: Jim http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-4290 Sat, 02 Sep 2006 21:17:35 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-4290 First of all, you should think twice before investing in individual stocks. Unless you are well-versed in the company, its finances, and its sales prospects, you are setting yourself up to lose. A smarter move is to invest in a well-diversified portfolio of mutual funds, chosen in such a way as to represent a broad cross-section of the market. Your funds should include some percentage of international stocks, real estate, value, large-cap, small-cap, mid-cap, etc. You get the idea. Over the long term, it is the rare 'investor' that actually beats the market. Once you've got your portfolio selected, follow the principal of consistent investing, which simply means putting a fixed amount into your portfolio on a regular basis. You do this REGARDLESS of whether your portfolio is up or down... regardless of price. You don't take money out... you just put money in. Over the course of your investment lifetime, if you've carefully chosen your portfolio, making tactical adjustments for risk as you grow older, you WILL benefit more than the guy who takes hit and miss shots along the way, plays hunches, or tips. It's hard at times, but it works. Wish someone had given me this advice when I was in my 20's. Good luck. First of all, you should think twice before investing in individual stocks. Unless you are well-versed in the company, its finances, and its sales prospects, you are setting yourself up to lose.

A smarter move is to invest in a well-diversified portfolio of mutual funds, chosen in such a way as to represent a broad cross-section of the market. Your funds should include some percentage of international stocks, real estate, value, large-cap, small-cap, mid-cap, etc. You get the idea. Over the long term, it is the rare ‘investor’ that actually beats the market.

Once you’ve got your portfolio selected, follow the principal of consistent investing, which simply means putting a fixed amount into your portfolio on a regular basis. You do this REGARDLESS of whether your portfolio is up or down… regardless of price. You don’t take money out… you just put money in. Over the course of your investment lifetime, if you’ve carefully chosen your portfolio, making tactical adjustments for risk as you grow older, you WILL benefit more than the guy who takes hit and miss shots along the way, plays hunches, or tips.

It’s hard at times, but it works. Wish someone had given me this advice when I was in my 20’s. Good luck.

]]> by: Nathan http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-3823 Sat, 26 Aug 2006 17:57:54 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-3823 For investors, you should still definitely stick to your allocation budget. A skewed portfolio always exposes you to unncessarily risk. You should still evaluate stocks on a constant basis so that they don't go bankrupt or having business going really downhill without you knowing about it. Besides that, borrowing traders' strategies just save you more at the entry price, assuming you hold the stocks long term. For investors, you should still definitely stick to your allocation budget. A skewed portfolio always exposes you to unncessarily risk. You should still evaluate stocks on a constant basis so that they don’t go bankrupt or having business going really downhill without you knowing about it. Besides that, borrowing traders’ strategies just save you more at the entry price, assuming you hold the stocks long term.

]]> by: Vince http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-3821 Sat, 26 Aug 2006 17:36:42 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-3821 I noticed you said "trader" in the title. What say you for an "investor"? I noticed you said “trader” in the title. What say you for an “investor”?

]]> by: 7thseer http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-3786 Fri, 25 Aug 2006 17:47:46 +0000 http://www.investorgeeks.com/articles/2006/08/24/the-worst-mistake-that-a-trader-can-make-average-down/#comment-3786 Yes, i agree completely. Averaging down is especially dangerous idea for novice investors. Its psychologically hard to sell at loss, so they try to turn around the situation by buying more. Yes, i agree completely. Averaging down is especially dangerous idea for novice investors. Its psychologically hard to sell at loss, so they try to turn around the situation by buying more.

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