The so called stock repair or averaging

This is something that brokers push to make more commissions.

Here is an answer i recently gave.

I have bought cpl hundred shares of morgan stanley last october,and now its trading $10 below my purchase price..do you think applying stock reapair strategy would help me break even or cover any of my losses. if yes, who is the best person to ask? someone from my brokerage firm?or anyone else?please write me back at your earliest convience.


OK so you have say 200 shares of morgan stanley valued at 47 a share

ie 9400 worth.

Now looking at the 5 year chart of MS,

it shows a trend toward going sideways from may to jun then dropping from jun to jul

in 3 out of 5 years.

That tells me I have a sell signal right now

MY OPINION ONLY BUT THIS IS WHAT I WOULD DO IN MY PORTFOLIO

IF your loss is only 2000 now

I would look at other stocks that you have a profit in

and take that profit while you take the loss in MS

ie you break even.

As for stock repair or stock averaging or whatever they call it now

I CALL it good money after bad

ASK ANY person who repaired or averaged priceline when it dropped from 130 a share to 2 a share.

But Merril Lynch said it was a great repair stock.

Now why do you think Merrill Lynch is now called ING.

Stock repair or averaging is where you buy at 50 and it drops to 30 so you buy again

hoping it goes to 40 and you break even

or whatever your stock repair plan says to do

In the long run I have lost

so I just don't do it any more

period

good luck

2 weeks later I gave this follow up

Hmm its a couple weeks later and MS is 42.95 ie its down 4 bucks

from the 47 price it was at when I suggested to you to sell.

I hope you did

good luck