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Castle
Thank you - a bit of luck to start with went in quite heavily at 168 and sold out at 218.
I’ve then been riding the up and down wave before ditching at 216 before rights issue. It’s really addictive I had a plan not to get in again until sub 75 but had a rush of blood. Not too much damage as managed to get out quiet quickly.
I really feel for investors who rightly supported this good share before the virus as I think it is going to get really messy.
As predicted a nice little 7% swing from this morning. Short lived rise I’m sure but still.
I’ve done really well trading in and out over the last 6 week selling before the rights issue. Unfortunately I got suckered back in 112 but luckily I managed to dump them at 109 before they hit their lows
I will not touch them again until the new shares start trading and can gauge institutional sentiment
Very short post I was being glib. There is always a data point that makes your averaging work. But with IAG with such downward pressure this is not the case.
Also you are losing the opportunity to off set some capital gains tax against more profitable shares held outside of an ISA.
Well spotted Henry stating the bleeding obvious, how can I average down if the current price is the same as my average. I would love an explanation of that :)
Debate is about whats best to do, average down or sell up and buy back at lower cost if the price drops
If you dump at £2 your maths do not work out
Oh and you are also eliminating the risk of a jump in price between selling and buying if you dump the lot
There is no difference
If I have 2000 shares that I paid £2 for I have an average of £2 - Cost £4000
If I buy another 1000 shares at £1 - Cost £1000
I now have 3000 shares that I paid £5000 for = Average of £1.67 per share
If I sell 2000 shares for £1 I recoup £2000 with a loss of £2000
I then add £1000 to the £2000 I got from the sale and by 3000 shares @ £1 = £3000
I have to recover the £2000 loss to be in profit on the shares.
£3000 + £2000 (loss) = £5000
So I have 3000 shares that cost £5000 = Average of £1.67 per share
MacRs
I understand- the world would be terrible if we all agreed with each other - l appreciate other points of view.
Henry - I disagree with you. You have to include the actual loss you made into your average cost of your shares. The phychological bit is if you sell the average comes right down and looks better. The loss is forgotten about because it's hidden.
MacRs
I understand the principle of averaging down but on a falling stock that you believe will eventually make a come back - mathematically you will maximise your profits in the long term by complete sell outs and re-buys. I understand why investors do not as there are human factors involved but purely from a dispassionate point of view it does not make mathematical sense. IMO.
Henry - If you sell all your holding you turn a paper loss into an actual cash loss. If you buy a higher number of shares is fine but the price needs to go up to cover the actual loss incurred through selling.
If you average down you are using the cheaper shares to subsidise the higher cost shares if that makes sense. The only measure of profit is average cost v actual share price. That measure needs to cover any losses made from selling.
George - by selling out completely and buying back cheaper offers much better returns in the long run then simply averaging down. If you sold out 5000 iag at £2 today you could get back in with 10500 shares.
Minimising losses is just as important as maximising gains IMO.
It could drop a bit more, then again it might not, its impossible to call, lot depends what this **** show of a government pull out the hat next. Would sooner lock in a pile of new shares at 86p than wait and see it rise back over £1 again (which I think is more likely than further drops into the 70's), look at DTG / JET2 share placement, their price jumped 20% overnight, despite all the gloomers saying the funds etc would dump their allocation as soon as they can, they didn't, and its never gone back to £5.60 (though is a bit close atm).
Obviously any meaningful share price recovery cannot commence till this nonsense is over, latest I predict that would be is March next year, but that is very pessimistic, they are all running about panicking over winter, long term this will be fine.
Ok Martin. So when does the 12 month timeline start? In other words when is the end of this hysteria? Don't you see further price falls from here? Or perhaps not, hence why you are taking the rights up today
The deadline for IAG to be informed about rights is Friday but for many brokers it is today. What appears to be the consensus here is to sell your rights now and buy in the open market when price goes down to 80p or lower. Which may be this week, or next week or on dump day of 7 Oct. You think IAG has enough liquidity to keep going and should break even soon? Buy now on market that the sentiment is lower and then wait for price to tick up. Still a good long term bet. When do you see it hitting £2.
I never understand averaging down. If you truly believe a stock is going to fall why not sell out completely and buy back at cheaper price . This disposal can also off set tax and capital gains etc.
Teddy is right here, the problem is, this share is as i see it uninvestable at least until the RI shares are in circulation. Impossible to tell where this will go on 7th Oct. But if the full rights haven't been taken up by PIs & GS/MS are left with millions of shares, the market will be flooded sending the price crashing still further
The RI is indeed underwritten but the last thing you want is the FI’s sitting on a tranch of shares as they will off-load them as soon as they can. They have creamed IAG on this RI and any loss they incur will be negligible.
Good point HH, you're right
If you want IAG to receive your cash, take the rights. Buying in the open market is of no benefit to IAG because those shares were already issued by the company.
So, anyone who wants IAG to receive cash and strengthen its balance sheet should take their rights.
yes it could, but the rights is now an easy decision. There is no financial bonus in accepting the rights issue and buying the shares, the only decision is if you want more shares. If you want more, then buy then rights or wait and gamble that they will go down more.
I do not disagree. As I say it will continue to drift downward but I just think there could be a very short term bounce before it resumes its downward trend. Clearly a big gamble.
Clearly the markets are worried and fearing the worst but I suspect Boris will announce fairly lenient measures today which minimise the impact on the hospitality / travel sector as much as possible. So we could see a short bounce afterwards. Beyond this the SP will continue to drift downwards because of the impact of the RI and Covid.