Tuesday, February 10, 2015
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Pyramiding is an investment strategy in which an investor increases the size of their position by buying additional shares. This is done to capitalize fully on an investment that is performing well, and is basically the opposite in theory to averaging down. While the additional shares are purchased at a higher premium, due to the fact that their price is rising, the goal is to increase the overall return the investor expects to receive.
Averaging down is the term used to describe the strategy of buying a further amount of shares at a lower price than was originally paid, and as a result, lowering the average paid for each share.
Sector rotation is an investment strategy which involves the movement of funds between areas of the economy aiming to profit from specific economic sectors as their performance rises and falls.