Thursday, July 28, 2011

11 laws of averaging declining stocks


1. average only the fundamentally strong stocks. never average the weak.

2. time the averaging on the basis of technical indicators.

3. never average blindly the losers. all losers are not worth averaging. fundamentally weak should be handled as per the law 4.

4. average the fundamentally strong losers by selling the fundamentally weak losers.

5. averaging is not bad. rather, it is an opportunity. you get an opportunity to accumulate more of the good stock at even lower price.

6. never average if you want quick results. don't average for the short term.

7. don't average if you can't digest the stock slipping further.

8. never average in one go. average in steps.

9. don't hesitate to average the fundamentally strong stocks even in bear markets.

10. there is no end to the number of times you can keep averaging a fundamentally strong stock. provided, ofcourse, your judgement of the fundamental strength of the stock is correct.

11. never average in f&o. average only in delivery.

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