average down - lyc, can it work?, page-21

Generally speaking, most 'experts' would advise against the principle of averaging down on a stock. I tend to agree with this broad philosophy.
However, all stocks are not equal. Where a stock is in a mature stage, for example, with little prospect of growth and no positive external factors potentially improving it's position in the market, then yes, averaging down does not seem prudent.

Lynas has spent the last 5 years building up a plant and presumably a base of qualified multinational customers.
It's in a market that has seen the value of it's commodities gyrate violently and the cost of production for it's competitors go up.
This would suggest that current commodity values are close to a floor price otherwise no one in the industry would sell below cost.

When investing in a company and determining whether averaging down is appropriate, surely that company's position in the industry needs to considered.
Lynas is producing commodities for use in growth industries.
The low kg value is a natural barrier to entry to potential new competitors.
Existing competitors use older technology in processing, thereby increasing their CoP.

Lynas should be considered a LT investment. Even those who invested years ago, and are still holding, are likely to be underwater, considering the opportunity cost of having their funds sitting in this stock for so long, worse still for those who jumped in at it peak.
However, the company is closer to proving itself than ever before, and IMO if there is anytime to average down it's now.
That is of course unless you believe that the SP will be heading south for the foreseeable future, and if you do, why are you holding?
Obviously this assumes one is investing rather than trading.