Originally Posted by pinkboy
in that case I wouldn't talk about "averaging down"; in fact, you're accumulating a portfolio of dividend-paying shares that you keep building up as funds become available. Nothing wrong with that - especially when you've done your homework and watch where you buy.
The term "Averaging down" is more commonly used in cases like the OP laid out, where one bought at the High and held stubbornly through a drop - in spite of Blind Freddy's dog seeing the trapdoor open.
In the context of such failure to stop-loss, you often hear arguments like -
"I haven't sold, so I haven't lost anything"And it's follies like those that are - to me and many others who can do the Math - like a red rag to a bull. Well, not quite as bad; I simply feel motivated to point out the fallacy of it...
"A paper loss isn't a real loss"
"It will come good eventually"
"I just buy more at a lower price, so I'll break even much lower."