“Buy Low” - But How Low?
We all know the old adage “buy low, sell high”. However many of us sit around scared to buy because we don’t know if the market will go even lower. Due to this fear many investors just sit on their hands waiting for a bottom that never happens.
How low is low enough to buy? Well we can never know when a stock will bottom. That’s telling the future and so far no one has invented a time machine. So for now, all we can do is look at the past. If you want to know if the stock is at a good price, look at the history of that stock’s price, ideally for the last 10 or 20 years. If this is historically one of the lowest prices it has ever been, that is low enough. Of course you need to be evaluating a full range of qualities about the company (or just cheat and use a bot like I do) but once you determine it’s a quality stock any price that’s on the lower end will be a good price in the long term. It’s better to buy a low price that isn’t the absolute bottom than to never jump in at all.
. 26 Mar 08 | Uncategorized