I am not a great one for maths, but I have fiddled around with Excel to give me a sheet that I can plug in the relevant numbers and which will go the calculations you set out above, including the pesky matters of trading fees and Stamp Duty Tax! AS to the broader point, you are right that there are a myriad of factors to consider before deciding to average up or down. I don't use any hard and fast rules , but I find that you get a feel for the right situation after a while. Three examples; I am currently averaging up on Bloomsbury (BMY) as my initial allocation was relatively small. However, based on the past performance and future (guided) growth of that company I feel comfortable bringing up my average price - but doing so as a DCA approach. Second example is Phoenix Holdings (PHNX) which is interesting as it is a fundamentally sound (albeit complicated) business, but is consistently very undervalued, partially because it is paying such a huge dividend. In this instance I do see some risk that I may never see my capital fully returned, but I am currently buying at 10% yield and that is sustainable for the foreseeable future with good prospects that the dividend will be increased, albeit by a small %. Once again, I use DCA approach. Last one is AGCO, where I have been down on my holding price by about 3-6% for a ew months. In that case, I would be very happy to average down but the gap is not yet enough for me to push the button and I feel that I will get a better opportunity over the coming months, with little risk of it shooting up quickly and losing out on my opportunity!
I hear you on PHNX and AGCO. I'm also a few percent down on my AGCO holding but very comfortable to hold. I'm also not averaging down at the moment because I, too, there may be further drops to come as the market comes off the top of its cycle. And, as you say, I'm not happy to buy more shares to increase my holding now, because, if a further drop does occur, I would then be too heavy to capitalise on it. I am bullish about AGCO's future, but I do want to study the Trimble JV in a bit more detail when I get chance. And if it shoots back up - great! I may have missed an opportunity, but I still get a return on my investment!
I don't hold PHNX, I hold LGEN, but a quick look at PHNX's financials indicates that the dividend is well covered, as you indicated. At 10% yield, you'd get your capital back in 10 years on shares bought now, I guess it depends on how much you are down currently and how long you are happy to hold. Good luck and I have my own fingers crossed on AGCO!
I am not a great one for maths, but I have fiddled around with Excel to give me a sheet that I can plug in the relevant numbers and which will go the calculations you set out above, including the pesky matters of trading fees and Stamp Duty Tax! AS to the broader point, you are right that there are a myriad of factors to consider before deciding to average up or down. I don't use any hard and fast rules , but I find that you get a feel for the right situation after a while. Three examples; I am currently averaging up on Bloomsbury (BMY) as my initial allocation was relatively small. However, based on the past performance and future (guided) growth of that company I feel comfortable bringing up my average price - but doing so as a DCA approach. Second example is Phoenix Holdings (PHNX) which is interesting as it is a fundamentally sound (albeit complicated) business, but is consistently very undervalued, partially because it is paying such a huge dividend. In this instance I do see some risk that I may never see my capital fully returned, but I am currently buying at 10% yield and that is sustainable for the foreseeable future with good prospects that the dividend will be increased, albeit by a small %. Once again, I use DCA approach. Last one is AGCO, where I have been down on my holding price by about 3-6% for a ew months. In that case, I would be very happy to average down but the gap is not yet enough for me to push the button and I feel that I will get a better opportunity over the coming months, with little risk of it shooting up quickly and losing out on my opportunity!
I hear you on PHNX and AGCO. I'm also a few percent down on my AGCO holding but very comfortable to hold. I'm also not averaging down at the moment because I, too, there may be further drops to come as the market comes off the top of its cycle. And, as you say, I'm not happy to buy more shares to increase my holding now, because, if a further drop does occur, I would then be too heavy to capitalise on it. I am bullish about AGCO's future, but I do want to study the Trimble JV in a bit more detail when I get chance. And if it shoots back up - great! I may have missed an opportunity, but I still get a return on my investment!
I don't hold PHNX, I hold LGEN, but a quick look at PHNX's financials indicates that the dividend is well covered, as you indicated. At 10% yield, you'd get your capital back in 10 years on shares bought now, I guess it depends on how much you are down currently and how long you are happy to hold. Good luck and I have my own fingers crossed on AGCO!