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> I meant more about doubling down on your (expected) winners particularly when their price falls irrationally You can't really know if the price fell irration
by xorfish 7y ago
> I meant more about doubling down on your (expected) winners particularly when their price falls irrationally
You can't really know if the price fell irrationally. Maybe its just you misinterpreting the available data.
The data is pretty clear, holding cash in case the market drops costs you more than a possible crash.
"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves"
This is an iconic quote that captures that sentiment.
- breck 7y agoI agree that it’s a worse strategy if you hold capital back. I was looking for a comparable in public equities where you keep buying more of the same thing, doubling down on the bets you know and like. I guess in private markets you are limited by the available supply. In Public markets you are limited by your capital. For me when I get more capital I will deploy generally in things I already own, which has the affect of lowering average price if the price has fallen(that’s why I made a mistake calling this DCA).
- xorfish 7y agoI mean today it is very easy to hold the whole market, so why take on idiosyncratic risk that doesn't have a positive expected return when you can just the whole market and maybe some factor premiums? The price you bought it is irrelevant, all that matters is the current value of the security. If you have capital, it is always the best decision to put it in the market as soon as possible.
- whatshisface 7y agoStill, whole-market investing should not be regarded as riskless. It takes ten to thirty years before it goes from "usually a good idea" to "virtually always a good idea."
- breck 7y agoFor passive investing that’s the Way to go. But I am an active investor And put time into helping my companies whether big or small. I like to have a thesis And invest on that. I also would be willing to underperform a Certain percentage if it Was in service of companies that I think are building a better world. Though FWIW have beaten vfinx easily past 5 years.