Friday, 31 July 2009

Pyramiding Explained (Part 1)

While averaging down can be an effective strategy when investing in stock indices and other instruments that cannot conceivably ‘go bust’, it can be disastrous to allow all of your capital to gravitate towards stocks that are in terminal decline.

There is another way. You can average up by making a small initial investment and then committing additional funds to your profitable positions as they head north.

Read more of my article on pyramiding on the Barclays Stockbrokers "Smart Investor" web site.

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