Sunday, February 08, 2015
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Averaging down is the term used to describe the strategy of buying a further amount of shares at a lower price than was originally paid, and as a result, lowering the average paid for each share. For example, if 100 shares were purchased at $20 per share, and then a further 100 shares were purchased at $18 per share; the average cost per share is lowered to $19. What this means is that if the share price rises to $19, then the investor breaks even. If the price returns to $20, then a profit is made.
Sector rotation is an investment strategy which involves
the movement of funds between areas of the economy aiming to profit from specific economic sectors as their performance rises and falls.