nab - what gives?, page-14

angelus,

It's generally better to average up whenever you believe the price is going to go up!!!

Anything else is an insidious but very common investment behaviour called anchoring. Anchoring is the practice of letting previous or irrelevant information influence your next investment decision. In the case of averaging up (or down) it means letting the previous price you paid for the stock influence when you buy the new stock.

Markets are dynamic, and it doesn't matter what the price was in the past. The only thing that matters is what the price is going to do in the future. You can use the past price history to gauge what the price will do in the future (that's TA) but the specific price that you, personally, last bought the stock shouldn't come into it.

We all anchor to some extent. God forbid, I still do it, much as I try not to.

NB: Lest anyone wish to TOU me, this is, of course, not specific investment advice but general info on a well-known investment pitfall. I do not offer any specific investment advice on NAB or anything else, which would violate TOU!

On another note - congrats to everybody who bought in over the last few months. My last buy was $23.39 and I know a lot of others here bought in around the same price or in the 24s. It's a resounding win for FA, in my opinion - we gauged that NAB had been savaged by the market more than it deserved, and that the UK results were bad news in an otherwise relatively healthy company.

And now the rest of the market has caught on - pity they had to pay more than we did! :)