Buy low and sell high
I know it looks easy. However, in reality, it is much harder than it looks. People can be a perfect bargain hunter when it comes to everything in life, except stocks or investment opportunities. I have seen folks looking for the best electronic gadgets deal they can find (“50% off cellphone deals”, “25% off headphone sales”), and they are also scouting through the aisles in supermarkets just to find the best bread with lowest price and same quality.
They are jumping right onto “Happy Hour” drinks promotion or “Restaurant Week” lunches or dinners (not to mention those offered during promotions are not necessarily the best quality stuff). They track closely air-ticket price and hotel prices. They follow housing price and mortgage rates (price of the loan). However, when it comes to one thing, they will forget about such principle in a second:
Stocks and Investments
Rarely you hear people get excited about the lower price of certain stock as a great opportunity to “load up the truck”. Instead, you see worry signs on people’s face and sometimes, panic selling in the market. It is almost analogous as you go to supermarket, instead of buying the tomatoes that are on sale, you panicked and ran out of the store.
Just like what Warren Buffett’s advice to young college students: if you are more likely to be a net consumer of beef burger over time, you should always buy them at a low price whenever it is on sale. Similarly, if you are likely to be a buyer of stocks and other investment opportunities over your lifetime, you should buy them on sale and keep them over the long term.
Remember whenever the market is having some panic selling, some great companies’ partial interests are on sale; sometimes they are on a little bit discount, but sometimes they are on fire sale! The key is to get yourself ready when such moment comes. You need to read lots of companies ahead of time so that you understand the business and you are confident that the opportunity is a real fire sale or money trap. Then you just look the other way against Mr. Market when such moment is present.
Last but not least, when you are enjoying Memorial Day barbecue somewhere with friends and family, do remember those who made the ultimate sacrifice so we can enjoy the peacetime prosperity and safety! – my thoughts on Memorial Day 2018