RE: Will it slip more
posted on
Dec 30, 2005 07:40AM
If you look at the math below you will see that I did add 200 shares at $20.00
$100 + 10 = 110 / 200 = $.55 or 55% of $1.00
$200 + 20 = 220 / 300 = $.73 or 36% of $2.00
$300 + 30 = 330 / 400 = $.825 or 27.5% of $3.00
$400 + 40 = 440 / 500 = $.88 or 22% of $4.00
Take the second line as the example.
Original of 100 shares at an average of $2.00 per share
Total investment of $200.00
Now add 200 shares at $.10, or $20.00
You now have $220.00 invested and 300 shares
$220.00/ 300 shares = $.73 per share
This shows a reduction of 63.5% ($2.00-$.73=$1.27) ($1.27/$2.00=.635) or 63.5%
Next example
100 shares at $3.00 average = $300.00
Add 300 shares at .10 = $30.00
Total investment of $330, total shares at 400
330/400= av erage price of $.825
$3.00-.825=$2.175 reduction or 72.5% (2.175/3)
I don`t know what constant ratio you are talking about, but the above math shows an increasing percent reduction as the total investment increases using the 10% of investment buy scenario.
Show me where I am wrong.