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Dollar cost averaging

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Question asked 07/09/2024

Dollar cost averaging

G'day James and Team, Apologies for late submitting but here we go.Below two quotes from Last week's Q&A and Morning report 5 Sept We believe FMG & MIN are “looking for a low” and if we hadn’t entered too early we would be looking to accumulate into the current weakness.We like FMG in the $16 area, although we caught the proverbial falling knife too soon I am interested to understand if I understand the above quotes , that you would be interested to dollar cost avg down on the two stocks mentioned? If you do your general advice on ' dollar cost averaging down' Kind regards and I enjoy the podcasts and commentary in the emails. Christof

Answer

Hi Christof,

We often quote versions of “Plan your trade, and trade your plan” although we are investors not traders. Only in extenuating circumstances will we add to positions if it wasn’t part of our original plan, i.e. we often scale in and out of positions.

FMG – we would consider accumulating FMG into the current “washout” style weakness sub $16 if we had no position.
MIN – we would consider accumulating MIN into the current “washout” style weakness sub $30 if we had no position.

However, while we never say never (in true Bond style), we are hamstrung in our position with MIN given we have a 5% weighting and will not exceed that, while FMG at a 4% weighting does leave some room, with our theoretical maximum portfolio weight for FMG sitting at 6%. The risk with DCA, is not having a clear maximum weighting. Whenever we buy a stock, we have a max weighting for it, meaning we can average, but only to a point.

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Fortescue Ltd (FMG)

LAST UPDATED 06/09/2024 14:48

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