FOS...Eish..

[Italiano]

some advice please. I currently hold a nominal amount of Foschini shares and I am +32%down is it a good thing to average down? or stay long.

[kwagga]

Cut your loss. Except your loss and don't buy into risk to try and cover your losses.This is a classic mistake of newbies.omo

[louisg]

Kwagga, averaging down in the short term (trading) may be a risky prospect but surely if you are investing (long term) in a company that you believe has a great future, then the correct thing to do is to buy at the lower levels?

[Italiano]

Louisg.. i have the same thoughts in mind plus i see it as an upside to average down but only to a point that matches or is nearer its lows.that way when its on the up one can decide to remain in or sell. Of course i need to factor the trade costs.

[kwagga]

How much are you willing to factor down before you cut your losses? There is no denying a 32% loss with bleak future prospects for retail in SA. Sure keep the share for another few years if you like and see if the share moves up by more than 50% just to break even. It will eventually happen. I have no doubt. Or you could sell; wait for the worst to be over and a clear turn in retail stocks and buy at much lower prices. No use trying to swim upstream.omo

[Italiano]

Yep, Kwagga i get your point it just hurts. Thanks.

[louisg]

If I buy a share in a business that after thorough analysis I believe is worth 150c and am able to buy at 100c, I buy it. Now if Mr Market (Graham)offers it to me at 68c two months later AND I believe that the future economics of the business has not changed then surely I should buy more shres at these lower prices.

[louisg]

Italiano, why did you buy FOS in the first place?

[#9]

future economics of the business has not changed - the future economics of the share has all to do with the spending power of the SA consumer, and that picture is looking bleaker by the day. Are you sure you want to hold a share of which the E in P/E is shrinking by the month? A year ago a lot of fat cat economists would have laughed at 10% CPIX, interest rated would have peaked at 2% less than where it is now, etc. What makes you absolutely sure the picture will get better in the next 5 years? All I'm saying is that fundamental analysis does not take all factors into account. In the end its all about what the market says.

[Surf_Rat]

Personally I pull out the wave when the swell Dropped 10 -15% thats only if I can see another set coming mate So Woolies was a disaster at 1300 bucks never thought Preston and the boys price of 1150 would ever be reached at 1200 bucks I started to believe them mate so saw the gap in wescoal thanks to the forum climbed in and covered woolies losses and made some extra cash ,but 32% mate thats like a long time between sets so look at the 5 year chart mate or click on all and check how long you going to have to wait for the next set Like Louisg says history repeats itself but not ever 12 months otherwise we would all be rich china so if this time still gives you good return over long term wait I have the same issue with our chinas JD group mate but as brazen says there is play money and sit money make sure you do not turn play money into sit money cause then you can sit long time

[Italiano]

Hi All-aplogy for not responding sooner was out of town.in response to Louisg- i brought Fos cause i am in the retail sector myself and they have proven to be qite steady with all the right fundamentals. I also bought for the long term, Dividens-have been reasonable.I believe there is an upside hopefully sooner than the 5 yr stint worst case i cut my losses in the interim this will be a case of "sit monies".

[louisg]

Vitorc, death and taxes are the only absolutes that I know of. I agree that the outlook for consumer stocks in general have deteriorated significantly over the last few months, but are these not reflected in the prices already? If you are a long term investor you have to ride out the bad times as well as the good. If you try to get in at the bottom and out at the top in the short term then you are a trader. A trader's strategies are different to those of an investor.Share prices may be driven by sentiment in the short term but it's earnings that count in the long term.

[john_1]

The biggest problem with the value stratergy is when a trade goes against you the logic of the trade says buy more. vs trend following that say I am right or I am out.

[louisg]

John do not confuse trading with investing. When you believe something to be worth R100 and it is offered to you at R90, you buy it. If at a later stage it is offered to you for R80 AND you still believe it to be worth R100, surely it makes sense to buy more. Yesterday I went to PicknPay to do grocery shopping. They had a special on Tobasco for R15 as apposed to the usual R20. Instead of buying the usaul one bottle,I bought three. Same principal.You should not allow the market to dictate to you. Your personal financial objectives will probably be different to the market as a whole.

[john_1]

that all great but what if the tabasco if useless as it is spoiled you just bought R45 worth of nothing. same for shares.

[john_1]

I do understand your point of veiw and I am not trying to change your perspective. I just think that the market must dictate. I dont care what the time frame is everybody should be looking to make a profit and protect capital. Leaving a loser run does neither of these two things.

[louisg]

John, the market may dictate the price of the share but you can choose what and when to buy,hold or sell. Going back one step and then forward two will get you up the flight of stairs. As long as you achieve your long term goals it sould not matter what happens in the short term. We all buy shares because we believe that we are going to be rewarded in the future. However if at any stage you change your mind about the prospects of a share, it makes sense to cut your losses and sell that "loser". Buying or selling a share just because it is going up or down is not smart way to invest.OMO

[louisg]

John I believe that we are on this forum to exchange ideas and learn from one another. You have your strategy and I do what works for me. And thats the way it should be. Just added tobasco to my lunch. Tasted great.

[john_1]

loiusg please send me a mail to [email protected] I would like to send you a link to a study done buy the london school of business. About the step climbing..that sounds like a good discription of a trend to me..