Hi,
I've been thinking a lot about averaging down on stock price and it's just not clicking for me. Could someone explain why it makes sense?
My thinking is that you bought every share at a certain price, and even after “averaging down” to break even quicker, you're still just up or down on individual shares. If you sell the whole position, you'd still be selling at a loss for some of those shares.
Say that you instead hold shares of two different stocks, one of which is currently doing well and one that isn't. You might still break even on average, but you'd still be up on one stock but down on the other. And you probably wouldn't sell the shares that aren't doing well, unless you don't believe in the company.
Why is it different when it's shares of the same company? Mathematically it doesn't make sense to me.
Sorry for any mistakes or unclear explanations, I'm not a native speaker.
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