Nov 3 2020, 02:38 PM
QUOTE(Boon3 @ Jul 29 2020, 08:57 AM)
That was perhaps a bit too late when I made that posting....
1. On the same link, I do have another reference posting on Maybank on Oct 2019, when I questioned the justification on it, as I see no meat in the trade/investment. No meat means taking big money to make small money. (post #2250) And when you add in the inherent market risk issue, why insist on a stock like Maybank? My opinion still remains. Interest rates are going down. (not a desirable environment for banks). Risks of businesses closing down and the impact on the bankers. etc etc .....
2. Coincidentally, on the same page link, post #2253 ,I left my BAT posting there. BAT gave out huge dividends in its history but the stock still plunged the last 5 years. In short, dividend investing has its risk. One can get good dividends but yet, the stock can still fall sharply.
3. Company like BAT or even Public Bank. Aren't their stock fundamentals good? Yet, their stock price has declined greatly since their last high. What I am saying here is that fundamentally good company stock can go down badly during the companies bad times. Last time, SapuraKencana was one of the biggest Oil and Gas player. How many dared to call it fundamentally no good during its glory years? Oil then plunged. The stock was 5.00+ then. Rest is history. It did a rights issue around 30 or 40 sen. Now SAPNRG (new name) is below 10 sen. Now I am not implying Maybank would plunge that low but I feel at the current moment, this is one stock, one is taking big money to make small money.
4. Average down, as shown in your own example, technically require a much substantial capital to rescue a bad initial stock purchase decision. In your Maybank situation (you can call it fundamentally good (ok, I might agree)), your example showed that one started with a 17k investment/trade. But due to the stock falling, the 17k investment 'suddenly' turned to 53.3k investment.
5. There is a limit on how much one can average down. Why? We see how the average down process required a huge increase in capital outlay. The capital outlay grew exponentially. Sadly, sooner rather later, one MIGHT run out of money IF the stock doesn't recover soon. (if you refer the maybank chart posted on post #2250, the stock is trading in a clear downtrend channel. If Maybank stock doesn't break out of its downtrend channel, the possibility that the stock could trade much lower again... in which we have to address the issue next, if Maybank falls back lower, how much more money will one put in again? How long can one repeat to average down?
Current Maybank chart below...
6. Based on the Maybank dividend examples, I cherry picked the lowest point to buy the stock. And the result was dismal. Just imagined if I did not cherry picked. The result would have yielded losses despite Maybank's dividends.
7. Oh currently, I failed to consider the 39 sen dividend received from your example.
which means, dividends = 0.39x7 = 2730.00. Holding gain = 1540.00
Therefore, current gains = 4270.
Outlay = 53,300
So currently gain shows a 8% returns.
Which means... your average down in this instance is not bad.
8. Opportunity cost. In the midst of averaging down the price and pumping in so much more money in the stock, one needs to address if this is the best option? What if there was a clearly better opportunity elsewhere? But since one is financially committed and stuck in the current process of averaging down the stock, one might perhaps forgo that opportunity.
Ok. Done my long winded posting for the day... just sharing my view points on the issue of averaging down. Like I said before, well if you think t can work for you, good lo. Stick to it.
Here we go .......1. On the same link, I do have another reference posting on Maybank on Oct 2019, when I questioned the justification on it, as I see no meat in the trade/investment. No meat means taking big money to make small money. (post #2250) And when you add in the inherent market risk issue, why insist on a stock like Maybank? My opinion still remains. Interest rates are going down. (not a desirable environment for banks). Risks of businesses closing down and the impact on the bankers. etc etc .....
2. Coincidentally, on the same page link, post #2253 ,I left my BAT posting there. BAT gave out huge dividends in its history but the stock still plunged the last 5 years. In short, dividend investing has its risk. One can get good dividends but yet, the stock can still fall sharply.
3. Company like BAT or even Public Bank. Aren't their stock fundamentals good? Yet, their stock price has declined greatly since their last high. What I am saying here is that fundamentally good company stock can go down badly during the companies bad times. Last time, SapuraKencana was one of the biggest Oil and Gas player. How many dared to call it fundamentally no good during its glory years? Oil then plunged. The stock was 5.00+ then. Rest is history. It did a rights issue around 30 or 40 sen. Now SAPNRG (new name) is below 10 sen. Now I am not implying Maybank would plunge that low but I feel at the current moment, this is one stock, one is taking big money to make small money.
4. Average down, as shown in your own example, technically require a much substantial capital to rescue a bad initial stock purchase decision. In your Maybank situation (you can call it fundamentally good (ok, I might agree)), your example showed that one started with a 17k investment/trade. But due to the stock falling, the 17k investment 'suddenly' turned to 53.3k investment.
5. There is a limit on how much one can average down. Why? We see how the average down process required a huge increase in capital outlay. The capital outlay grew exponentially. Sadly, sooner rather later, one MIGHT run out of money IF the stock doesn't recover soon. (if you refer the maybank chart posted on post #2250, the stock is trading in a clear downtrend channel. If Maybank stock doesn't break out of its downtrend channel, the possibility that the stock could trade much lower again... in which we have to address the issue next, if Maybank falls back lower, how much more money will one put in again? How long can one repeat to average down?
Current Maybank chart below...
6. Based on the Maybank dividend examples, I cherry picked the lowest point to buy the stock. And the result was dismal. Just imagined if I did not cherry picked. The result would have yielded losses despite Maybank's dividends.
7. Oh currently, I failed to consider the 39 sen dividend received from your example.
which means, dividends = 0.39x7 = 2730.00. Holding gain = 1540.00
Therefore, current gains = 4270.
Outlay = 53,300
So currently gain shows a 8% returns.
Which means... your average down in this instance is not bad.
8. Opportunity cost. In the midst of averaging down the price and pumping in so much more money in the stock, one needs to address if this is the best option? What if there was a clearly better opportunity elsewhere? But since one is financially committed and stuck in the current process of averaging down the stock, one might perhaps forgo that opportunity.
Ok. Done my long winded posting for the day... just sharing my view points on the issue of averaging down. Like I said before, well if you think t can work for you, good lo. Stick to it.
Maybank below 7 now ....
p/s Them trend lines........
This post has been edited by Boon3: Nov 3 2020, 02:39 PM
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I guess if I were to trade Krono, it be difficult to reach the Aug volume now, unless more contracts are awarded and better QR ahead. Personally, I prefer to buy on dips but it is always interesting to learn about technical analysis. 
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