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Talking stocks, trading, and investing in general - Page 674

post #10096 of 11160
Quote:
Originally Posted by Concordia View Post

For most IRA/401k savers, they are de facto dollar-cost-averaging, which is putting every new dollar to work in their policy portfolio. No harm in having them keep their nerve.

For others already possessing their zillions, you run into a different problem: are the prospective gains to be made by dollar-cost-averaging enough to override the opportunity cost of sitting on cash (which the less affluent saver doesn't have to worry about)?

Thanks for expounding. Maybe I'm missing something, but I still don't entirely follow.
Normal investors are only dollar cost averaging if they keep putting their incremental investment dollars into the same vehicles (or asset classes, or whatever). And whatever the size of your portfolio, putting money into securities makes sense only if the expected return exceeds other options (holding in cash, paying down debt, starting a business, buying lottery tickets, whatever).

Certainly if you're rich it can be a bit easier to diversify. And there are probably certain opportunities available to you (real estate deal with $100,000 minimum buy-in, for example) that aren't realistically available to other people. But the basic calculus of whether to increase your investment in an established position (even if that position is cash) or open up a new position is the same.
post #10097 of 11160
But if you had a (temporary) cash stake and wanted to direct it to an investment, does it really make sense to average in except for psychological reasons? I mean, you're doing it because it has a higher value to you than cash. If you're so damned sure the price will drop, then don't go in at all.
post #10098 of 11160
Quote:
Originally Posted by Concordia View Post

But if you had a (temporary) cash stake and wanted to direct it to an investment, does it really make sense to average in except for psychological reasons? I mean, you're doing it because it has a higher value to you than cash. If you're so damned sure the price will drop, then don't go in at all.

Sorry, I'm honestly not trying to be difficult, but I'm honestly confused. (Long week here, so maybe that's part of it.)

Oh wait, I think I see what you're saying. You're talking about something like starting out knowing you want 500 shares of Acme Corp. but spreading out your purchase in tranches of 100 shares (or whatever size) over some period of time rather than just buying at once? Agreed, I don't see any reason to do that unless you're such a player that you're concerned about moving the market or being front-run or something.

That's not exactly what I mean by dollar cost averaging. Sorry if I wasn't clear. I meant something more like throwing $100/month or whatever your 401K payroll deduction is into an index fund or something every month, which automatically achieves dollar cost averaging because when the market or security price is down you get a few more shares for your $100 and when it's up you get a few less shares. It's pretty much the opposite of trying to time the market.
post #10099 of 11160
Quote:
Originally Posted by lawyerdad View Post

Thanks for expounding. Maybe I'm missing something, but I still don't entirely follow.
Normal investors are only dollar cost averaging if they keep putting their incremental investment dollars into the same vehicles (or asset classes, or whatever). And whatever the size of your portfolio, putting money into securities makes sense only if the expected return exceeds other options (holding in cash, paying down debt, starting a business, buying lottery tickets, whatever).

Certainly if you're rich it can be a bit easier to diversify. And there are probably certain opportunities available to you (real estate deal with $100,000 minimum buy-in, for example) that aren't realistically available to other people. But the basic calculus of whether to increase your investment in an established position (even if that position is cash) or open up a new position is the same.

I think the difference that might be escaping you is incremental versus opportunistic. He doesn't mean DCA, he means averaging down. I think that's what "if you had a (temporary) cash stake and wanted to direct it to an investment, does it really make sense to average in except for psychological reasons" means DCA, The rest seems a bit of word salad.

He made a point above that seemed spot on, but then it started to splinter. Abandon the rich vs poor stuff.

Unless I'm the one now off base, what he's saying is what is the point of dropping some of your nut for the sake of keeping an incremental processional investing cycle going, ala WiseBanyan, instead of holding the nut and dropping it when the timing seems better (averaging down). This is what I do since fortunately I have an 401k that has no bounds, there are no crap ass funds or whatever, its the Schwab PCRA, so I can do as I please. So I have let the incremental cash build towards a moment of my choosing on most occasions, or park it in PGX (free w schwab) for occasional dividend timing.
post #10100 of 11160
Quote:
Originally Posted by idfnl View Post

Unless I'm the one now off base....

We all know this could never be the case.
post #10101 of 11160
Quote:
Originally Posted by idfnl View Post


This raised an eyebrow, as they just built a huge office building near my home. I'm astonished, that chart looks like boulder going downhill. How can a company losing that kind of money spend that way?

They have a lot of debt and leveraged companies are not in favor. 

 

Especially with government contracts from Iraq and Afghanistan roll off combined with a declining media market. 

 

Declining markets and very high leverage wipe out shareholder equity. 

post #10102 of 11160
So to the thought that dollar cost averaging and "averaging down" are essentially the same...


DCA's basic concept is to ignore market timing or movements with scheduled purchases and the impact of DCA should be the average cost per share will be less than if one attempted market timing.

"Averaging down" is based on the concept of market timing or the trader is in possession of information the market is not. I say this as the assumption is the trader feels he/she is timing the market with a dip to lower the cost basis and the stock will rebound from the dip, or continues to buy on the way down, with the assumption that he/she knows something about the situation the market does not and the stock will rebound based on the trader's knowledge/assumptions.

So DCA's underlying concept is to remove all the trader intent that "averaging down" is absolutely predicated upon.
post #10103 of 11160
Verizon Said to Announce $4.8 Billion Yahoo Takeover Monday

In related news, Comcast is rumored to be purchasing Lycos.

Mayer's reaction:

post #10104 of 11160
Maybe Google will hire back Marissa. As a Senior Product Manager.
post #10105 of 11160
I have a different version of dollar cost averaging being that I hold positions over years with a goal of holding them even longer. I am also dealing with new money and each new position I take requires additional research on my part. Once I got to about 25 companies I found myself still only following along very closely with say 20~ of them and so I have less conviction about those last five.

That being considered I would rather put new money into existing positions and so I average down when the opportunity presents itself. I play market timing with new money, generally waiting for something to happen before putting it to work.

I am usually buying at what I expect is a good deal, rather than specifically looking for a bottom, unless I really do expect things to continue to fall apart. Occasionally this strategy proves idiotic, but often enough it has been successful. Luckily I can sit on positions forever without the itch of opportunity cost starting to bug me and without any outside forces calculating the gains I didn't make in the short term.
post #10106 of 11160
Quote:
Originally Posted by SkinnyGoomba View Post

I have a different version of dollar cost averaging being that I hold positions over years with a goal of holding them even longer. I am also dealing with new money and each new position I take requires additional research on my part. Once I got to about 25 companies I found myself still only following along very closely with say 20~ of them and so I have less conviction about those last five.

That being considered I would rather put new money into existing positions and so I average down when the opportunity presents itself. I play market timing with new money, generally waiting for something to happen before putting it to work.

I am usually buying at what I expect is a good deal, rather than specifically looking for a bottom, unless I really do expect things to continue to fall apart. Occasionally this strategy proves idiotic, but often enough it has been successful. Luckily I can sit on positions forever without the itch of opportunity cost starting to bug me and without any outside forces calculating the gains I didn't make in the short term.

This is just about what I do too.
post #10107 of 11160
Well then, MBLY shit the bed.
post #10108 of 11160
Eagerly awaiting anal penetration by AAPL.
post #10109 of 11160
NFLX - I sold off a large chunk of stock today... bought it all around 83-85 and sold it at 92-93. Still holding plenty but felt this was a little extra overbuy I did on the drop. Quick turnaround and 7-10% return on the money in a few days and I'm ok with that. These are the kind of gains I like. The story I read was a few insiders did some heavy buying. Normally I'd wait for a slow steady regain once the dust settles, but if there's some big one off jump of 5-10% in a day then sometimes I skip where I was planning to buy/sell and just act on it. So today NFLX did a 6% jump more or less and I'm out. If it come back down to 85 more or less I'll buy back in the same amount of money I just sold and ride the rollercoaster again.

GILD - so not great, but not terrible either. Bought up an extra 1/3 of my position which was averaging about 88 I think. Bought a bunch from 82-84 so now averaging 85 I think. Will sell off this portion at about 90. Not a big gain from 82/84 to 90 but hopefully a relatively quick turnaround, like within the month with some luck. I'm still holding out on my main position for closer to 100-110 but that seems like it's going to be a while if ever.

AAPL - not sure what to do on this one... holding as much as I'd like to but it's been moving sideways forever. Still planning to hold it long term until 100, 110, 115, 125, and eventually 130. Long term. That being said, as a trader, I don't have a good feeling about tonight's report so I'm considering selling some shares today. These are shares I bought around 93/94 I think so could sell them for 98 and still have made money and if tonight it drops 5-7% or something I'll just buy back in. If it goes up 2-3% I won't really care.... decisions, decisions.

SPI - haaa, such thin trading volume on this wow. I put in a sell order of, get this, 150 shares (at $5.5) and only 100 of them sold. I had a partial order filled on 150 shares.
post #10110 of 11160
WOOOHOOOOOOOO

Edit: lmao at this cheesy pic of Tim Cook


Edited by GreenFrog - 7/26/16 at 1:44pm
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