Background

In another chatgroup, a question was asked - if someone bought YTLPOWR at RM5, should they average down now that it is RM3.83?  At that time, I shared my own opinion that I didn't know/have one.  After the chat, I was curious to take a second look to both update myself, and see if there's anything potentially useful to others who may have been "trapped".  

Business Profile

As a general comment, the questioner may be an expert in YTLPOWR and you might not be one.  So, if you plan to copy / follow to invest in YTLPOWR, then, my belief is you should at least understand its business profile, read its annual reports, get a sense on what its future earnings will be like in 10, 20 years time, and be "virtually certain" that its earnings will be materially higher than today (say double or triple).  Treat chats in chatgroups as exchanging points to do further independently thinking and investigations (as most chatgroups tend to "generalize" points you may already know / could make yourself).  If you can't visualize the doubling/tripling of earnings in 10, 20 years with certainty, then, better to avoid, or keep monies in EPF.   This space (certainty in knowing YTLPOWR future EPS in 10, 20 years time specifically) is unfortunately not within my circle of competence yet.  Here's a quick introduction based on the Profile section just to give a high level flavor of drivers to its next 10, 20 years EPS.

Fundamentals

Quick observations.

1. Q4/24 EPS is 5% lower. 13.16 is lower than 13.95 by 5%.  The question now is -  is YTLPOWR EPS rise now entering consolidation zone? (after very rapid quarterly rise over past 10 quarters?)  Is the rise over, or just a temporary pause?  What about competitors?
2. At current price of 3.83, TTM PE is around 9 i.e. not overly expensive.  Over past 10 years, the stock P/E is highly volatile so, anything can happen with this stock.

Charts

Typically, when a stock falls outside my circle of competence, I rely on charts for trading and even then, many setups are outside my own circle of competence.  

Here's my 2 sen worth (i.e. sharing for FREE):

1. The uptrend is obvious.
   
2. The fast uptrend as highlighted in the red box above is obvious.  (faster = riskier)
3. I suspect it is now trading in a different "box level" as highlighted in yellow.
4. The price action the past couple of weeks is potentially interesting for the chart trader.  Why?  Because it looks to be printing a potentially bullish "Bear Trap".   A "Bear Trap" is the appearance of a stock price breaking support level suggesting more downside to come but then decide to reverse upwards, essentially "trapping" the bears.   This price action is potentially bullish because if it no longer has strength to go down, then, the new path of least resistance is now up. (but doesn't always have to be like this - 2 other possibilities exists).
5. If you use indicators like Accum/Dist, it does look like there is still more accumulation than distribution, although just barely.  This type of pattern suggests consolidation than real accumulation.
6. The RSI pattern also looks like it wants to go up as well short term but problem is the strength is unclear and again looks to me to be more like consolidation.  However, within this box, there is also a potential for a bearish "Head and Shoulders" to form, if the rise doesn't break out of the yellow box.  In other words,  you still need to monitor the trade and see how it develops and to me, it is outside my circle of competence because I don't like trades like these, especially given the "vacuum" and given I haven't done the work necessary to get the confidence that it is now "permanently" trading in the new higher yellow box.  However, if you have done the work and you are "virtually certain" that YTLPOWR EPS in 10, 20 years time will be much higher than today, then, you can consider investing.  Make sure you understand the currency aspects too, as MYR is appreciating.

Summary and Conclusion

The original question is - should one average down if bought at RM5?

That's a hard question for me to answer because:

1. It's not normally a question I ask myself.  Instead, my focus is to find bullish markets and if I run out of cash, then, I would be looking at "repositioning".
2. Repositioning is more important to me and that is a very hard question to answer because you basically want your monies to grow than stall.  Vast majority of the times, it's not clear.  And you only act when it's clear to you.

Other reasons why it's hard to answer is because:

1. My belief is the trader Psychology/Mindset is the most important factor for success than average down in same stock.  Likely it's going to be very different than my mindset.  I am not a trained trading psychologist.  To me, my edges are patience, self awareness when it's FOMO related, conscious self-awareness of greed and fear in myself.  
2. The second most important factor to me is Position Sizing.  If I have a "full position", then, I will not add as a general rule, because of my belief that I will never know what price will do in the short term (even if I have a decent track record of short term prediction sometimes).  An example of the problem is whilst we sometimes have better than 50/50 guess, vast majority of the times, we come to a point where we can't guess anymore and then, the gain is not big enough to offset other times when we are wrong, offset commissions and provide enough reward for the time and effort spent.  And so, to me, it's futile when there's better ways.   Further, averaging down can commit a larger position, to either cause a drag to portfolio returns (if flat), or dig bigger holes (if fall) besides rising.
3. Hence, better to have some edges that price will rise in the longer term.  As to how to assess this - Buffett's advice comes in - if you can assess if its EPS will be materially higher (e.g. double or triple) in 10, 20 years time, then, this is your long term edge.   
4. Sometimes, you can also look at next quarter or next 3 quarters and if you have an edge here, it can also work as it is "longer term".
5. So, I haven't done this work (EPS in 10, 20 years time, next quarter or next 3 quarters), and so, it is presently outside my circle of competence.  Guessing factors conceptually is one thing and may work if all else is equal, but better to be more thorough.  The goal is to be "virtually certain".
6. For clarity, I don't plan to take this trade.  The main reason is myself, not the market.  I already have full positions, my own personal plan is to gradually reduce my Bursa trading positions over the coming months and years, to move to US markets.
7. If I were to pretend I am looking to make a trade, the question may be - will I take this setup?  If so, I would say the name, and the chart is potentially promising enough to study further its fundamentals.  The question to ask is - will YTLPOWR EPS in the next 10, 20 years be materially higher (say double or triple) than today's 42 sen?  Am I "virtually certain" of this fact?   
8. To be honest, I didn't have to do this work when it was trading below 60 sen - the margin of safety is obvious.   However, when the price is RM3.83, it is critical to do this work.

My belief is that managing your total portfolio and yourself as a trader is far more important than short term predictions about future prices. This is because unless it is insider trading, my belief is that I don't have an edge big enough to predict short term price movement reliably enough to offset trading costs and provide me with sufficient reward for the time and effort.  My belief is that we need to go beyond, with a simpler, clearer strategy to beat these price gyrations, in order to improve our odds of winning in the longer term on a total portfolio basis over the long term.

Disclaimer:  As usual, you are fully responsible for your own trade and investing decisions.