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TIP606: Multi-Bagger First Principles w/ Ian Cassel
We Study Billionaires - The Investor’s Podcast Network
Aim to Average Up, Not Down
Averaging down can be a mistake in investing, especially in scenarios involving highly leveraged companies, obsolescence risk, unprofitable businesses, and underperforming businesses after a bad quarter. Instead, it's preferable to average up when the business is accelerating, profitable, has sustainable growth trajectory, and low debt. Averaging down should only be considered when the stock is significantly undervalued compared to the business's trajectory, while avoiding situations where the company may raise money and dilute the stock value.
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