Hi Chuk,I believe you to be a very genuine poster and that is...

Hi Chuk,

I believe you to be a very genuine poster and that is how you come across.
I havent really taken alot of notice regarding your numbers because they arent what are going to influence my decisions and i really couldnt offer an opinion on whether i believe them to be accurate or not.
That is not my area of strength and am happy to admit that.

I do hear what you say technically and that is where my opinion differs.

I have also read tezzaks posts too and one minute he wishes to sound logical and have a plan and the next minute its out with the bath water.

here is your logic and this is where we differ.....

5 months ago the stock was trading at 8 cents.
Because it has dropped to 6 we will buy some. Now it has dropped to 5 lets buy some more. we now have an average price of 5.5 (providing the qty is doubled)

The trouble is the stock is now trading at 4cents so instead of having a loss of 2cents per share i've reduced my loss to 1.5cents per share.(smart?? - not really)

Effectively what you are saying is I made a mistake in buying in the 1st place so i'll rectify my 1st mistake and buy some more, then the stock drops again and that exaserbates the mistake and the loss continues to grow.

The other point i am making is, if you are unsure in the 1st place dont buy it.
The trouble with averaging down is the price is continuing to diminish. So call me crazy, why do i want to buy a stock in a massive downtrend and buy 4 weeks ago at 5.2 to see it at 4.1 today. What? so i can buy more today??

Call me crazy but buying at 5.2 when the stock is heading down and to think, 'well if it goes down further i'll buy some more does sound crazy!!

Trouble is this could still go to 3.5, so i think you are crazy for paying over the odds not just once but twice!!! But then again I suppose you can average down again??
The same then applies to what i have just shown above.

Now lets do the reverse.

When you average up you are not making a mistake, when you average down you are!!!

So you wait for the reversal, you buy at 4.5 the stock hits 5.5 so you buy some more.... When the stock hits 6.5 both lots that you have bought are in the money...
You are up 2cents a share on the first tranche and 1 cent a share on the next tranche.

If it goes to 8 you are up alot more.....

The big difference is when you average up you are in the money when you average down you are out of the money.

Call me crazy but i know what i'd rather do.

Chuk, i do hear you, if this goes to 3.5 or 3.2 before it turns, it will offer buy signals still in the 3's or early 4's so it allows plenty of time to get on board.

Hyperthetical scenario.....
What happens if, with economic conditions the way they are, what happens if ABU spend $20m on exploration,they then need to raise more money and dilute the price further and then TAM goes to the wall and they no longer have their joint partner.

Oh ABU is a 1.5cent stock, yet we keep averaging down so the loss isnt as great....
Where has our stop loss been all this time??

This is very much a contrarian view because thats not what 'the crowd does'.

Some of you guys should keep an open mind, i dont dispute your fundamental stuff.......

And that is why many people went broke and lost so so much during the GFC...


Tezzak, in regards to BTU the TA guys pick the time to buy and would have ridden the stock up...

Back to ABU, I posted a couple of months back that there are intersecting trend lines fast approaching and it will be may/june which will then offer true direction of ABU...

I'll be watching and i shall post if the direction changes, but in the mean time there is no averaging down or buying for me....


Cheers