(04-01-2012, 11:07 AM)dzwm87 Wrote: [ -> ]Updated!
hi dzwm87, just sharing some of my thoughts on averaging. I struggled with this for a long time. I practised averaging based on buying price but it didn't seem to really work (that well) in GFC2008, because it was a big one and one may not be overweight in cash (definition of not over-weight is '<50% cash')
For now, my averaging (down) in a correction/recession/depression is based on a few factors (in descending order of importance):
(1) VIX (S&P500 volatility index)
(2) Cease in director and company share buybacks
(3) Consistently low daily trading value on the exchange
(4) Coming to valuebuddies forum and see how many are scared..
(5) Price (either from dividend yield, P/E or P/B depending on company)
To sum it up, gauging the 'fear indicator' is my main averaging signal, rather than price now.
(16-01-2012, 06:41 PM)weijian Wrote: [ -> ] (04-01-2012, 11:07 AM)dzwm87 Wrote: [ -> ]Updated!
hi dzwm87, just sharing some of my thoughts on averaging. I struggled with this for a long time. I practised averaging based on buying price but it didn't seem to really work (that well) in GFC2008, because it was a big one and one may not be overweight in cash (definition of not over-weight is '<50% cash')
For now, my averaging (down) in a correction/recession/depression is based on a few factors (in descending order of importance):
(1) VIX (S&P500 volatility index)
(2) Cease in director and company share buybacks
(3) Consistently low daily trading value on the exchange
(4) Coming to valuebuddies forum and see how many are scared..
(5) Price (either from dividend yield, P/E or P/B depending on company)
To sum it up, gauging the 'fear indicator' is my main averaging signal, rather than price now.
Hi WJ,
i think you are quite spot on; 9 out of 9 fear indicator at it's greatest is also price almost at its lowest. In fact you should keep some bullets to use at this time if you can overcome your fear. The problem is we won't know when is the greatest fear.
As for me (most of the time) once a bear market is confirmed, i started to average down. Yet i always find myself average down too early or too fast.
Shalom!
Updated - with a short coverage on Meiban Group (no longer vested)