average down

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Average down

A strategy used by investors to reduce the average cost of shares, in which the investor purchases more shares with a fixed amount of capital as the price of the shares decreases. The investor receives more shares per dollar and decreases the average price per share.

Average Down

To buy more shares in a publicly-traded company in which one already owns shares after the stock price has gone down. Averaging down lowers the average price at which one buys the stock, which, if the price goes back up, will increase one's profit when one sells the stock. However, averaging down carries the risk that the stock will continue to decline.

average down

To purchase shares of the same security at successively lower prices in order to reduce the average price at which the stock was acquired. If an investor buys 100 shares of Disney common stock at $40 per share and the price subsequently falls to $30 per share, the purchase of an additional 100 shares would average down the investor's cost to $35 per share. Opponents of this strategy argue that the investor is simply throwing good money after bad and would be better advised to sell the stock, having realized that a mistake had been made to begin with. Compare average up.
References in periodicals archive ?
para]]As lenders loosen mortgage guidelines, average down payment amounts decline[[/para]]
Shares also came under pressure late in the session, as worse-than-expected retail sales figures in the US sent Wall Street's Dow Jones Industrial Average down by more than 2% in early trading.
House of Representatives rejected the original bailout plan Monday, triggering panic selling that sent the Dow Jones average down 777 points -- the biggest-ever single-day point loss in U.
The pessimistic sentiment sent the Dow Jones industrial average down 585.
Under its contract with the MoD, BT has to pay fines if the average time it takes to deal with a call is too long - and the bogus callers drove that average down, it is alleged.
MATCHES between Leicester and Northampton have produced an average of 28 points over the last four seasons, and it could be that today's clash brings the average down further.
LAPD officials have said they want to bring the citywide average down to eight minutes.
Taken as a percentage of the sales price, the average down payment dropped to 19.
The average down payment on conventional loan offers made to LendingTree borrowers in Q4 was $47,585, or 17.
5% - after a heavy sell-off sent Wall Street's Dow Jones Industrial Average down almost 4% in early trading.
Panic selling swept across Wall Street, sending the Dow Jones average down 777 points, the largest-ever single-day point loss in U.

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