Are you sure about your Long-term Investment patterns?
How many times have you thought ‘I’ll buy this share later when it goes ‘lower’” and later regretted when it instead went higher? Or do your long term investment plans just don’t seem to work?
It’s time for you to understand the Buy Low- Sell High Strategy and recognise where you’ve been going wrong all along!
What is the Buy low- Sell High Strategy? How is it misused?
Buy low-Sell High tactic is the oldest telling the stock market and is, in reality, the most misused investment strategy. This approach simply means entering the market at a lower price and exiting with a good amount of profit. The method looks difficult to practice to most as the market prices reflect emotions and psychology. Which can be challenging to predict!
But the thing to know is that in the market, everybody has a blinding herd mentality and to you staying with the herd may seem like the right choice. But in reality, moving against the herd is actually the right step to take. This means that you need to take advantage of the herd and not fall along with it.
So, when should you start buying?
The first thing to remember about the market is that you can never be sure about its growth or fall. Recently, Reliance’s shares fell 5% and many started to sell their shares. But considering their history, it was the right time to get in the market and buy at low. You might expect the shares to go lower, but ‘now’ is really the perfect time to enter the market.
The market overshoots on the upside and the downside, and it is difficult to determine when the market is at its ‘lowest’ or ‘highest’ for you to invest. Many think that they’ll wait for the market to clear up before they start investing. But think about it, if the market clears up, where will the shares go? Higher of course. This is why the Buy low- sell high tactic is usually misused and difficult to practice.
Now, What should you do?
The Market is always volatile and should be carefully examined. So, before investing, it is important to know a few things.
01. Make a Plan -
What is your plan?Why do you want to invest and what profit margin do you expect in how much time?
You should know where you are today and where you want to reach. If the market prices suit your plan, then sell your shares. If not, then wait.
02. There is no best time to enter the market-
The markets will not move according to your predictions or assumptions. Do not wait for it to go lower and simply invest.
You might think that the market is very unstable and you are afraid to get in the market. But now is the perfect time to get in the market. If you wait for the market to revive, the shares will obviously go higher. Not lower.
03. If you want to Sell High, then Stay-
If you’re investing for a long time, there will be market fluctuations that should not bother your place in the market. The market is volatile and these fluctuations will be a part of your journey in the market. The roads are often bumpy but you have to remember your destination instead of going back. So, analyse your plan. If your plan doesn’t include selling, then don’t.
Make changes in your investment pattern, only if your plan changes. How the market is doing, shouldn’t affect how you react to it. Only your plans should. And always get yourself a financial advisor. They’ll guide you with your investments and tell you where you’re going wrong.
(Saarthi for your financial dreams)