"Averaging Down Could Make You a Major Shareholder"... Buying More and More for a Week [World of Retail Investors]

/Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week.
At this rate, I wonder if I’ll really end up becoming a major shareholder." K, a 41-year-old office worker, clicked on a post with that headline without thinking while browsing a stock investment community over lunch.He had been staring at the order book all week and repeatedly buying more shares, so the story felt uncomfortably familiar.
K is also one of the retail investors who were tossed around by last week’s "roller-KOSPI" volatility .The KOSPI has swung sharply since news on the 22nd of last month that SK hynix had overtaken Samsung Electronics in market capitalization for the first time in 25 years.99%, and also stepped in to average down on the 26th, when a sell-side sidecar was triggered.Then, on the 30th, as the market briefly extended its decline after the opening bell, he was about to buy again out of habit but stopped when he saw that his investment amount had already swelled to twice what he had planned because of repeated averaging down.
/Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week.
02% in the previous month.02%./Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week./Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week.
On June 23, it posted its largest-ever drop, then rebounded by more than 3% the next day.
On June 25, it surged by more than 5% with a buy-side sidecar, only to plunge again a day later, creating a truly roller-coaster market.
/Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week.
18%, the sixth-highest level on record.
On the 30th of last month, the KOSPI also opened higher, quickly slipped, and then rebounded again, showing a mixed trend.That is why retail investors like K, who use a staggered buying strategy in falling markets, kept averaging down./Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week./Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week.
In itself, that is a rational form of small-scale averaging down, but if it is repeated, the share of that stock in the overall portfolio can exceed a dangerous level That is why the joke, "If you keep averaging down, you’ll end up becoming a major shareholder," does not sound like a joke at all.When money becomes concentrated in a single asset, investors may also become numb to concentration risk.99%, and also stepped in to average down on the 26th, when a sell-side sidecar was triggered.Everyone knows the basic principle of diversification, but in a market that swings wildly every day, repeated averaging down can leave investors focused only on the immediate goal of lowering their average purchase price.The problem is that even if the average price falls, a larger position size means that a mere 1% move in that stock can put the entire portfolio’s return at risk .Under normal market conditions, it is rare for individual investors to keep pouring additional funds into the same stock.But in a volatile market like the one seen recently in Korea, where indices can swing by several percentage points in a single day, unplanned averaging down can be encouraged, so caution is needed.I don’t want to become someone who keeps saying, "I should have bought, I should have sold, I should have held.
" Stocks, real estate, and investing all seem to work out for everyone else except me.
/Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week./Photo=News1 [Financial News]  "I think this is already the third time I’ve averaged down this week.
bng@fnnews.com Kim Hee-sun Reporter