One of the most counterintuitive ideas in investing is averaging upward, or adding to a winning position (also known as pyramiding). If we are invested in a great business that will be worth several times its current market cap (over time, an investor’s mind evolves into thinking in terms of market cap rather than stock price) in the medium to long term, then we must not hesitate to add more shares at a higher (sometimes much higher) price than our original cost basis. Our focus as investors should always be on expected returns based on the current price.
