10 February 2013

Average Cost Investing: A Bad Long Term Investmetn Strategy

Average Cost Investing is one of silly investment strategies I heard before. This investment strategy may sound promising at the first glance. However, please consider the following facts before apply it.

Business is changing

Yes, business is changing. There are too many factors affects a business,  such as technology, politic decision, key person,  nature disaster, supply and demand and so on. Simply applying average cost investing will only increase our risk if the interested business is going to be 'disquilified' by the market or its competitors.

Smart consumers' strategy

Generally, smart consumers will only buy a large quantity of their desired products during the so-called "Mega Sale" or promotion period, don't them? I rarely see a consumer who will be considered as a "smart consumer" by using "average cost buying" strategy. In other words, in order to be considered "smart" in investing, it would be a good idea to wait and buy a large quantity shares of good businesses during "promotion period".

Well, as usual, it is always earlier said than done. One of the key skills to take advantage during "promotion period" is to know the "value" of businesses so that we know whether the "discount" amount is sufficient for us to offset potential risk and to optimise our return.That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage for latest sharing.

Written by: Xaivier Chia

(P/S: The above sharing is solely based on personal insight. Please do not take it seriously. However, your valuable feedback are very welcome.)


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