Value Investing News

Jason,

I might be a chump but I frequently double down if my % loss is significant and occurs relatively quickly (think large drop versus slowly chipping away at my capital). This of course is only if I don't feel that I made an error in my investment thesis and the fundamentals are still attractive. What company are you considering averaging down on?

I don't have a very specific rule about doubling down. The two things I do consider are updating my intrinsic value estimate for any new financial data and adjusting my required margin of safety for any increased risks and erosion of competitive advantage. I also double check the internet for skuttlebutt about management to be sure there are no new red flags that might indicate bad behavior. After that, I consider my available cash and portfolio concentration. Then I'll add more to my position for every 10-25% increase in the margin of safety associated with fall in share price.