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Madness at the NSE
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murchr
#891 Posted : Wednesday, August 26, 2015 5:36:43 PM
Rank: Elder

Joined: 2/26/2012
Posts: 15,980
You know things are getting interesting when there are only 3 stocks with gains. Who doesn't love this market?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
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arkard
#892 Posted : Wednesday, August 26, 2015 5:40:44 PM
Rank: New-farer

Joined: 9/24/2012
Posts: 63
instinct wrote:
the blood letting continues at the NSE.. when will it stop?


I wish the Techies on this forum would tell us how long it will be before it stops...in the meantime we keep buying.
Above all, guard your heart, for it is the wellspring of life.
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mlennyma
#893 Posted : Wednesday, August 26, 2015 5:51:34 PM
Rank: Elder

Joined: 7/21/2010
Posts: 6,194
Location: nairobi
arkard wrote:
instinct wrote:
the blood letting continues at the NSE.. when will it stop?


I wish the Techies on this forum would tell us how long it will be before it stops...in the meantime we keep buying.

tomorrow always belongs to God pple just predict
"Don't let the fear of losing be greater than the excitement of winning."
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hisah
#894 Posted : Wednesday, August 26, 2015 6:07:08 PM
Rank: Chief

Joined: 8/4/2010
Posts: 8,977
arkard wrote:
instinct wrote:
the blood letting continues at the NSE.. when will it stop?


I wish the Techies on this forum would tell us how long it will be before it stops...in the meantime we keep buying.

One can only estimate market tops and bottoms. The topping signs were there from Q3 2014. At the moment I don't foresee any bottom signs yet as long as we have CBK in the current mood of hiking rates. Then add on to that the global selloff and the cocktail gets very potent. When NSE20 exhibits excess fear at least then we can say the bottom is almost there. But since the start of the selloff people are still in the hope mood. Hope during selloffs means more pain is in the way. Extreme fear/pessimism is what marks bottoms.

The hope language is what I have highlighted. This market has a lot of this language floating around in the forum. We have acres to fall.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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dpmungai
#895 Posted : Wednesday, August 26, 2015 6:37:53 PM
Rank: New-farer

Joined: 10/16/2014
Posts: 33
Guys! Someone please explain this math

Average Down:
bought 1500 centum shares @63 bob = sh94,500
say the share goes down to 35 bob smile , invest another 50,000 ~1400 shares
TOTAL investment = 94,500+50,000 = sh 144,500 for 2900 shares
Average price sh(94,500+50,000)/(1500+1400) shares = 49.48 bob

If the share was to rise to 60 bob, then investment value = sh60*2900 shares = sh174,000

Sell and buy later:
Sell all 1500 shares at 50 bob 50*1500 = sh75,000
say the share goes down to 35 bob smile, invest all the money back and the additional 50,000 to the stock ~3500 shares (125000/35)
TOTAL investment = 75,000+50,000 = sh 125,000
If the share was to rise to 60 bob, then investment value = sh60*3500 shares = sh210,000

Is this correct? How is it you make more money option 2 unlike averaging down??
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chikonde
#896 Posted : Wednesday, August 26, 2015 7:50:36 PM
Rank: New-farer

Joined: 1/15/2010
Posts: 81
You do make more, but less than you think. You forgot the 'loss' between initial buying and selling prices (sh 19,500).
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Mukiri
#897 Posted : Wednesday, August 26, 2015 7:52:11 PM
Rank: Elder

Joined: 7/11/2012
Posts: 5,222
dpmungai wrote:
Guys! Someone please explain this math

Average Down:
bought 1500 centum shares @63 bob = sh94,500
say the share goes down to 35 bob smile , invest another 50,000 ~1400 shares
TOTAL investment = 94,500+50,000 = sh 144,500 for 2900 shares
Average price sh(94,500+50,000)/(1500+1400) shares = 49.48 bob

If the share was to rise to 60 bob, then investment value = sh60*2900 shares = sh174,000

Sell and buy later:
Sell all 1500 shares at 50 bob 50*1500 = sh75,000
say the share goes down to 35 bob smile, invest all the money back and the additional 50,000 to the stock ~3500 shares (125000/35)
TOTAL investment = 75,000+50,000 = sh 125,000
If the share was to rise to 60 bob, then investment value = sh60*3500 shares = sh210,000

Is this correct? How is it you make more money option 2 unlike averaging down??

Applause A very good question, moreso to value investors. I have a feeling someone will say, one can't predict the bottom. So just keep buying!d'oh!

Proverbs 19:21
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snipermnoma
#898 Posted : Wednesday, August 26, 2015 7:53:13 PM
Rank: Member

Joined: 1/3/2014
Posts: 257
dpmungai wrote:
Guys! Someone please explain this math

Average Down:
bought 1500 centum shares @63 bob = sh94,500
say the share goes down to 35 bob smile , invest another 50,000 ~1400 shares
TOTAL investment = 94,500+50,000 = sh 144,500 for 2900 shares
Average price sh(94,500+50,000)/(1500+1400) shares = 49.48 bob

If the share was to rise to 60 bob, then investment value = sh60*2900 shares = sh174,000

Sell and buy later:
Sell all 1500 shares at 50 bob 50*1500 = sh75,000
say the share goes down to 35 bob smile, invest all the money back and the additional 50,000 to the stock ~3500 shares (125000/35)
TOTAL investment = 75,000+50,000 = sh 125,000
If the share was to rise to 60 bob, then investment value = sh60*3500 shares = sh210,000

Is this correct? How is it you make more money option 2 unlike averaging down??


Your math is right. Based on the share prices used, sell and buy later with top up beats averaging down. The key is that your exit price (50) is higher than your re-entry price (35).

I am very glad you are taking the time to figure out your situation. On my initial post I did not provide this scenario which was an oversight on my part. My apologies. I'm also sure you have deduced by now what it will take to make a profit if you use a hold-only (no additional funds) strategy.
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obiero
#899 Posted : Wednesday, August 26, 2015 9:31:36 PM
Rank: Elder

Joined: 6/23/2009
Posts: 14,354
Location: nairobi
chikonde wrote:
You do make more, but less than you think. You forgot the 'loss' between initial buying and selling prices (sh 19,500).

Apart from that, there is also significant commission on selling and buying back in, then selling again
COOP, IMH, KEGN, MTNU
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Cornelius Vanderbilt
#900 Posted : Wednesday, August 26, 2015 10:18:18 PM
Rank: Member

Joined: 8/15/2015
Posts: 817
arkard wrote:
instinct wrote:
the blood letting continues at the NSE.. when will it stop?


I wish the Techies on this forum would tell us how long it will be before it stops...in the meantime we keep buying.



draw your Fibonacci levels on the below chart and enjoy with peace of mind investing in the nse

http://www.bloomberg.com/quote/EURUSD:CUR
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