fantastic market reaction, page-113

NJ,

The issue i have with your example is that the person who bought SLR at 50c, then buys another large chunck at $2.5 after it fell from $3.5 had justed averaged UP believing that it would be headed back to $3.50. Because he has 'fallen in love' with stock his initial averaging UP has led to him having to averaged down as the price sank further.

If he had not fallen in love with it and NOT avereaged UP. He wouldn't be in a position to be averaging down, he still would be holding a healthy paper profit.

You are right people need to choose the right point to 'average up' (i prefer to use the term accumulate), and average down. If your in for the long haul you need to pick an accumulation point where you are confident your average price will be lower or likely to be close to a bottom or be easily cleared should any downturn occur and reverse or the fundalmental of the company makes you believe that the price will eventually recover above your average.

Unless your confident of any of those then you shouldn't be averaging up or down. You should be just getting the hell out and taking what ever profit you managed to accumulate so far or the little loss you have copped. If your just hoping that it would continue to go up or recover above your average, which I myself have been guilty of on an number of occasions, then you are just having a bit of a gamble..and thats what a lot of people tend to do..sometimes the gamble pays off and sometimes it doesn't the more informed you stay the more chance of your 'gambles' paying off, similar to counting cards at a casino.