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Don't throw good money after bad
Investment expert Giles Hargreave of Hargreave Hale gives his short but straightforward advice for making a profit from investing.
by Michelle McGagh on Mar 15, 2012 at 11:06
This Money Master Class is given by Giles Hargreave, a leading smaller companies fund manager and chief executive of Hargreave Hale.
Giles started his career in investment in 1969 and runs a number of funds including the Marlborough Special Situations fund . He has some straightforward advice for those who want to play the market.
1) Run your profits, cut your losses
2) Average up, not down
3) Capture the mood, don’t fight against it
Giles has kept it short and sweet by choosing these oft-heard investment maxims, but they offer a good base for investing.
Investors should not be frightened to let their investment grow if it is doing well, there is always the temptation to take profits too early – it’s finding the tipping point between letting it grow and letting it turn into a loser.
Equally if your investment hasn’t done well, don’t let emotion keep you in – cut your losses and get out of there!
When Giles talks about ‘average up, not down’ he is talking about throwing good money after bad. Averaging down is the tendency to buy more of a stock if it is in a decline in the hope that markets will bounce back up. He advocates investing more in stocks that are doing well (averaging up) – just make sure the stock isn’t overvalued.
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