Psychology of Averaging Up


I'm currently reviewing my 2022 portfolio because 12th August is the first green day for me since the war broke. In the past 6 month, my strategy has been “buy more deeper dips”, basically my purchase doubled with every 5-10% drop, e.g. +10 shares, +20 shares (-10%), +50 shares (-20%), +100 shares (-30%) etc. Fortunately the market started to turn around before I run out of bullets.

However what I didn't do, and don't like to do (or couldn't do) is to average up, I also have (slightly less) problem paying more than the lowest price I paid before. For example, YTD the lowest SPY I got was $363, that was my last purchase of SPY even though my average is $392. There were plenty of opportunities in $370's and $380's range that I saw but consciously ignored to continue to buy (and average down). As soon as SPY crossed $392, I stopped watching it because I couldn't bring myself to average up.

I'm sure you see a lot of flaws in my methods and would probably advise “time in the market…..” or “just DCA and chill”. Yes I understand these methods and there are stats to back them up, but the emotional/psychological side of me is actively resisting them.

Now the weekend is here, can you guys recommend books (chapters) or articles that specifically address these behaviours? Something more layman, like instead of pointing out smoking causes lung cancer based on many researches and stats, these books deploy/introduce other social/emotional/psychological influences to change the behaviour?

Thanks!


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