Buy high & sell Low?
Is it true that this is done only by retail investors? I seriously doubt so.
Just look at Cathie woods for validation.
Big name investors and fund managers also make errors and ending up buying high and selling Low.
Buying high is influenced by greed and FOMO, while selling Low is influenced by fear.
Greed & fear are always the 2 emotions thatinvestors need to master before they tear the portfolio apart.
When comparing Buying High & Selling low, I will prefer to look at which is a viable strategy.
Selling Low locks in losses. It involves loss of capital and although we can say that we do fund rotation by taking loss and transferring to another opportunity, it doesn't wash away the fact that the losses are real and incurred.
However, when we look at buying high couldit be a viable strategy?
When people buy high, is there a reason for doing so?
1. Buying at all time highs but the company is growing agressively, could be A profitable strategy eg $Tesla Motors(TSLA)$
2. Technical analysis could have shown upward movement
3. Buying at high could be subjective, eg. 52week high but still have significant upside (>50%) compared to 5 year high
4. Stock value underestimate actual value ofcompany (under valued stock despite share prices raising)
5. Averaging down to a better price is a viable strategy as cost basis is reduced and it's a proven and more stable approach to timing the bottom aka Dollar cost average (DCA)
All in all, I would prefer to buy early and get a not as gd price with potential of further dip, then lament that I missed the boat.
If everyone can time the market perfectly, there will be no reason for the FIRE (Financial independence Retire Early) movement. Just call it the AIRY (ALL IN RETIRE YESTERDAY!!!) movement instead.
Well that's Just me. [Cool]
Invest safe everyone, bad times are the besttime to DCA [Victory]
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