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Investing Myths Series - Buy Low and Sell High

Investing Myths Series - Buy Low and Sell High


1) Buy Low and Sell High

This is the mantra that was taught and still being taught as a one line guide to stock market. It sounds simple, it's sounds like a better deal and even sounds like a no brainer.

But it is super difficult or outright impossible to be right over a long term. A good Stock's price go up and down but gradually goes up over long term.

Say you buy a stock for $200 and it goes upto to $300, you think it's a good profit, sell it and got yourself a profit of $100. But the price keeps raising and hits $400. Now you think it's better to wait until it's price comes down but instead it rises some more and reaches $500. Now you will get into fear of missing out , think it can go further up, so you buy it at $500.

Now it falls down to $400, You will think you will wait until it goes back up , but it goes further down and reaches $200, You will get into panic mode and sell it at $200.

Net profit : - $200 ($300 loss and $100 profit)

It's easy to believe that you can Buy low and sell high, but you will never know what price is the lowest to buy and what price is the highest to sell.

Everyone is wise in a bull market and everyone is a fool in a bear market.

Better way to invest in stock market is to invest a fixed amount every paycheck or month called

SIP - Systematic Investment Plan

Checkout bankingblog.net for more articles about personal finance

7 Saved
Ashok· Sep 02, 04:50
In investing terminology we call it Dollar Cost Averaging. That is the most sensible way of investing, provided you are not looking for quick profit. All investing over the long term always give you profit, provided you keep investing regularly and remain invested for at least 10 years.
1 Like
Mustafa· Sep 02, 14:10
not always sir it can destroy you as well
Ashok· Sep 02, 14:13

Mustafa And how is that?

Mustafa· Sep 02, 14:19

Ashok i have seen some events where people got destroyed in long term investments totally because of no right decision on right time its my personal point of view

Ashok· Sep 02, 14:26
If you are doing dollar cost averaging, you can never go wrong. To confirm my statement, I request you to google and look for Andex Chart, which gives you the history of investment performance for past 50 years. That chart is based on actual facts and not assumptions. You will notice that in any 10 year period, investments have always gone up. In the middle it will definitely go up and down, but in end if 10 years, it is always plus. We can sit and discuss in detail, if you are interested.
Mustafa· Sep 02, 16:26

Ashok what will you suggest me to invest in? lets say starting from 5 to 10k

Ashok· Sep 02, 16:48

Mustafa please call me on [[Sign In to see link]] after 3 hours. There is a procedure to be followed to assess your risk tolerance profile, which consists of 10 different questions and based on the replies that you give, the appropriate investment can be suggested.