Buy Low, Sell High

 

The rule of investing in the stock market is buy low and sell high.

Buy a stock when its price is low and then sell it when the price is high so that a profit is earned.

The trouble with our nature is that we don’t want to let go of something when it is doing good.

We want to abandon the ship when it is sinking.

This is what many people do in the market. When the price starts dropping, they start selling off.

It is an emotional reaction.

We carry this emotional, knee jerk reaction into other areas of life as well.

No one gets a divorce when the marriage is doing great. No one gives up on his kids when they are well behaved and achieving good grades. No one quits a job right after the boss gives them a raise, more vacation time and a new office.

We walk out when things are down.

The winners in the market and life are the ones who can ride out the downturns and avoid acting emotionally.