- US AI darlings are worth value averaging
- Good to own London-listed growth stories
As we mentioned last month, investors in quality shares should consider a method like value averaging to help take the emotion out of difficult market timing decisions. This method is where you set a target minimum growth rate for the size of your holding in a company or security. If the stock itself goes up by a lot, then you don’t need to buy in much more to hit the monthly growth target. If the stock goes down, you’ll buy more but at a cheaper price. The drawback is that you may be buying in on further negative momentum or buying in slowly on positive momentum (although in the latter situation there is upside exposure).
While no method is perfect, value averaging is useful for building positions in high quality shares that any investor would be happy to own for the long run. Growth is the critical element, however. Some outstanding companies that are deservedly richly valued may just lack enough capacity to positively surprise the market for their shares to really deliver an outstanding return from the current price.
