buy low, sell high

[feh]

Pretty simple advice, which most individual investors do the exact opposite of. Couldn't be more easily demonstrated than by the graph at the top of this article:

http://money.cnn.com/2013/04/12/investing/stocks-rally-inflow/index.html?iid=HP_LN

Using FSTVX, which is a total US stock market index, returns for 2009-2012 were 28%, 17%, 1%, 16%. While this was occurring, people were yanking money out of the market.

Just a reminder to not be one of those people.

[BuckyBadger]

And since knowing what "high" and "low" are is completely impossible (and is called "market timing"), the only way to avoid doing this is to stay the course. Choose an asset allocation with which you can live - something that lets you sleep at night - and do absolutely NOTHING when the market fluctuates.

Using periodic re balancing, stay at your chosen asset allocation. This is as close to "buying high" and "selling low" as a smart investor should get.

Allow your asset allocation to become more conservative as you approach retirement age and therefore have less time to recover from a market decline.

It's not HARD to be a smart investor, it's just terribly terribly boring, so no one has television shows about how to do it. It's much more exciting to yell and scream about stock picks and hot buys, but that's the absolute worst way to try and make money in the market.

[feh]

And since knowing what "high" and "low" are is completely impossible (and is called "market timing"), the only way to avoid doing this is to stay the course. Choose an asset allocation with which you can live - something that lets you sleep at night - and do absolutely NOTHING when the market fluctuates.

Agreed. I wasn't promoting timing the market - I was just pointing out how most people buy/sell at the wrong times.

Occasionally rebalancing one's portfolio often does result in buying low/selling high, as you mentioned.

[sherylgray]

Buying and selling at right time is the mantra. This doesn't come straight away. You really need to track the market (for some time atleast) to have a clear picture about selling and buying.

You may lose some money initially, but get on track you can make huge profits.

[BuckyBadger]

Buying and selling at right time is the mantra. This doesn't come straight away. You really need to track the market (for some time atleast) to have a clear picture about selling and buying.

You may lose some money initially, but get on track you can make huge profits.

Disagree. You can not time the market.

[BuckyBadger]

Agreed. I wasn't promoting timing the market - I was just pointing out how most people buy/sell at the wrong times.

Occasionally rebalancing one's portfolio often does result in buying low/selling high, as you mentioned.

Phew! That's a relief!

I spend a lot of time on the Boglehead boards and it's amazing how many people come up with these little schemes and plans on how to do "better" in the market. They're all just subtle variations on market timing, but it's amazing how well people do at either:

1) convincing themselves that THIS THING isn't market timing, it's something new and different

or

2) THEY have the ability to do what NO ONE ELSE IN THE WORLD CAN DO and time efficient markets.

But everyone just keeps on trying to come up with ways to beat the market...

[ameer hamza]

most people buy or sell at the wrong time due to which there things do not undergo according to their market rates.if they sell things at the right time then they can get more profit.

[dunnrobert700]

Trying to follow the mantra "Buy low sell high" is...ironically...what causes people to end up buying high and selling low. A belief in timing + normal human emotions almost guarantees a bad result. Any good results (and there are plenty which is why this is still a problem) are the result of gambling.

The mantra "invest for long term goals and apportion for acceptable risk" would help solve the problem.

[sherylgray]

Disagree. You can not time the market.

Sorry if I got wrong with my statement. What I actually mean that people should closely watch the market ups and downs. This will give them good idea about when experts are actually buying and selling. This will help a lot in their decision making.

Correct me if I am wrong.

[parafly]

It is impossible to time the market, but at the same time, you can be smart about the timing of an individual investment.

Personally, my strategy for investing in my Roth IRA is to dollar cost average by contributing once per week for the entire fiscal year. I watch the stock market every day, and when the market declines, I pull the trigger. If the market is up every day of the week (not very often), I make my contribution on Friday.

It's the best of both worlds ... DCA with a tiny bit of market timing sprinkled in.

[Folio Explorer]

timing down markets?

I generally agree that market timing is problematic due to erratic returns, but what about buying when assets are "on sale" following a bad week or month? Bull markets are difficult to characterize because a positive run could be irrational speculation or fundamental movement to higher prices. Bear markets, on the other hand, are dips from realizable price points. Prices will eventually recover... on some time horizon. (If prices never recover to a previous high, then we have more to worry about than our IRAs and 401ks.) My IRA contributions are half with dollar-cost averaging and half when news anchors moan about a terrible month on Wall St. Any thoughts?

[ladyjessica81]

good advice