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Originally Posted by OMG!WTF!
I think dollar cost averaging is meant more for people trying to get large amounts of cash into the market safely over time rather than as a means of softening the blow of a downer like cjr. Actually, I don't get averaging down at all. I think it's just a way to convince yourself you were not wrong for buying a stock. It's human nature...avoid pain, seek pleasure.
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While I generally agree, it matters if you think the market has over-reacted or not, what the inherent value of the stock is, and what the long term health of the company is. The market does act irrationally both positively and negatively so it is possible to take advantage of that either way. In this case when I see the stock price sitting at 1/3 of the book value, I think that’s fallen to an irrational level. But I still don’t see this as good long term hold so I would be looking to get out at some point, probably just not right now.