Absolutely right. It is amazing how easy it is to lose sight of the fact that it is much better to buy after the market (and my investments) has taken a beating than when its testing record highs and every man and his dog is going on about how much they are making.
That said, a slightly different approach is justified with individual stocks and assets which can drop to zero or where you can lose more than your investment.
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Dear Folks,Here's the deal:Buy a very good stock:A stock with strong numbers(fundamentals),strong relative strength(price of stock is going up strongly versus the general market).A stock that grows earnings and net margins quarter over quarter.Buy a stock that "feels like" a "winner":i.e. people just love the product sold by your company.Look for a company that the Big Guys-mutual funds-like to buy.Read Investors Business Daily for good growing prospective stock-buys.Most importantly, after you buy a stock,immediately set a "stop-loss" order 8-10% under your "buy-price".That is a parachute that bails you out of a declining stock-should it go down.This is how to avoid sitting there,waiting for your dearly-beloved stock to rise like Lazarus from the dead.Buy-and-hold is a good strategy for losing large chunks of money.Seriously.
Commenting by HaloScan
