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Author: Calabogie Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 36679  
Subject: Re: Averaging Date: 7/20/2001 1:30 PM
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It's not much different than my plants...I buy in what I think people will want (what I can sell), but some for some reason people don't want and I can't sell them at a profit. My choice is to let them die or sell at a big discount or I can go out and buy more of these (the grower has them marked down now) but I don't know if I can make a profit even at this "discounted" price....so I'm better off selling them at a discount and taking the money and buying something I know people want to buy."

There is nothing like a good analogy to explain a seemingly complex concept. Your analogy simplifies not only the principle of averaging down, but also provides a valid argument against it. The options you cited should be on anyone's short list of considerations when facing a similar dilemma.


Couldn't agree more! Well said Jean and well seconded Josie!
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