Pay Attention to the Cycle!!
·
Pay attention to the cycle – do not invest for
the long term (i.e., buy and forget for 30 years).
a. Cycles
matter – Some might dismiss the significance of market cycles, calling them too
simplistic to provide meaningful investment guidance. But they are a force to
be reckoned with.
b. It
is essential to pay attention to market cycles, but never bet the ranch on
them.
c. We
have to realize the limits of our investing horizons (i.e., relatively short
compared to a full market cycle of 20 years), we need to pay attention to
market cycles, because time does matter to us, and we don’t even know for sure
how much we have.
·
Buying stocks is like buying anything else;
there are good times and bad times to plunk your money down, determined by the
most basic market regulator – the law of supply and demand.
a. Just
like groceries and cars, there is an ideal time to buy stocks – when they are
about as popular as swimsuits in the winter. The worst time to buy stocks,
conversely, is when they are hotter than the latest block buster film and
people are lining up to buy tickets.
b. Value
investors wait patiently for stocks to go on sale, because they know that
prices will rise and fall based on news events, public sentiment, business and
market cycles.
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