Don’t Buy When Market Is Going Down – What Is It?
Naririnig ko lang from others these two statements: “Don’t buy when market is going down, buy when market is going up” and, “Don’t catch falling knives.”
These are both of the same, though. They are telling you about a strategy that they don’t buy when the price is on the way down. They reason out that they will incur more paper losses “if” the market falls further. They reason out that you will have a longer recovery if the market goes sideways. If the market goes sideways, they are forced to sell to protect their capital for greater losses and so as not to prolong the time “wasted” for them waiting for the next rally.
What I see is that it’s good for short term trader dahil when the market is going up, they can unload their shares quicker. Unlike when it’s going down, you will have to wait for more time to recover from the paper losses. So their main reason why they buy when the market is going up is that “if” the market continue to rally upward, they can unload their shares very quickly to realize a gain.
But does that affect my strategy of buying and holding for my Money Machine? Kaya ang tanong ko sa aking post sa isang investment group, “If you are a long term investor buying shares/units every month, what’s the difference kung bumili ka ng Index Fund na P7600 noong October 21, 2016 as the market is going down compared to P7600 noong April 20, 2017 as the price is going up kung pagbabasehan ang price ngayon?
Long term, I don’t see much of it’s implications except that the second purchase on the way up has a higher growth rate than the first purchase when time element is factored. For example, iyong P100 mo ay kumita ng another P100 in one year, that’s 100% growth. But if your P100 gained another P100 in six months, that’s 200% growth even though they both earned P100.
But here’s most traders don’t factor out: “waiting period”. Kung sabay tayo na may hawak na same amount of cash, bumili ako noong pababa. You did not buy yet at that time, but bought when it’s going up at the same price I did. So what’s our difference if we sell at the same time at the same price? In my perspective, I see NOT A THING! We earned the same amount, we spent the same time, and we gained the same growth rate.
So what is “don’t buy when market is falling down”? Or “don’t catch those falling blades”? They are simply “noise”. And noises in the market should be ignored if you want to play the game to win.
We can’t time the market, but we can let time to work on our advantage. Kaya naka-auto-invest ako monthly. I save my time monitoring and waiting for the good time to buy. I buy regularly, then simply ignore the noise. I then can use my time (supposed to be used for monitoring and worrying) to concentrate on what I know best about earning money – working on my job, and on my part time business.
I know the pain of having no money. I lost all my investments, not totally sa stock losses but with “other” investments that did not work out. It’s hard to see your hard earned money slipping away from your hands because of using a wrong info or wrong strategy. I followed a blind tour guide to my financial freedom and I found my self in the ditch. The person with experience ends up with the money, and the person with the money ends up with experience.
Kaya dapat, you have to know who you are listening to. As my mentor said, “The best place to look at is in their bank balance. Don’t follow broke people’s advise about how to become successful.”
Pero okay lang, my experience is a part of my learning process. It’s just that I paid too much, not only financially kundi pati pamilya ko that almost broke apart and devastated because of my failures. These kinds of experience, I don’t want other people to go through kaya isini-share ko ang aking story to inspire others.
“Searching for a winning stock is like searching a needle in a haystack. Buy the haystack instead of searching the needle.”
When I staged my comeback, I made sure that I have a strategy. I promised to learn from successful people, look at what they are doing. Kaya mayroon akong ginawang sariling financial blueprint na by-product ng aking research how I will recover from my financial disaster.
Click the photo to receive your FREE copy to check out my Game Plan to win my financial freedom.
I will make sure that I will reach my financial freedom, the goal that I missed na aabutin ko sana sa aking 50th birthday. I have the best vehicle, unfortunately, I didn’t have the knowledge to drive it and take me to my destination in my given time. My resolve NOW is this: I will until, if not waving at the top, you will see me dead on the side trying.
What could this article be to you? Maaring nagi-start ka pa lang kung ano ang gagawin mo sa iyong personal finance. You are still looking for someone to guide you to your journey. Take advantage by taking me as your guide. Not that I am already a success, but I know explicitly where I am going. And I know we can turn a hero out of you if you just do something. Searching for the best stock is like searching for a needle in a haystack. Buy the haystack instead of searching the needle.
There’s enough wealth for all of us, just claim what’s yours by planting as many seeds that will turn into a shade. What you plant today can change your family’s destiny. Poverty should stop from you. You can only stop that poverty running through your descendants if you make your decision and take action. And that should start NOW.
Hey, you should start by reading my Pinoy Millionaire Game Plan. And don’t forget to share what you think, because what you think matters most than what I have in mind.
Here’s to your financial freedom!
