I've just noticed on another stock forum that most are heavily against cost averaging and wondered what ASF members think of this tactic and whether it has worked for them or not.
Just recently, I have noticed that this method is no longer working for me. In fact all it is doing is reducing my capitol base and amplifying losses.
I'm finding it challenging not to cost average and to put the stock into a bottom draw, or just to bail.
There are some obvious answers to this technique and it would relate to the quality of the investment and future prospects.
In hindsight, it is easy to see the mistake of this procedure if the SP continues to fall - of course, much better to buy at the bottom.
Have others found more success in bailing, then to buy back at the lower price, or to hold the original investment and add?
Something that muddies the water is the issue of a stock that has a decent dividend yield. As the SP falls the dividend yield percentage often improves. I have found that long term holds, such as my managed funds do in fact give me a chance at improving my dividend yield which adds to the compounding effect of re-investment.
Then of course we have the threat of the SP falling so far that the dividend yield percentage is no longer achievable by the company we have invested in and the playing rules are changed under our feet.
I'm not really doing very well here with this bear market and look forward to some comment.