I heard a cool phrase the other day – I do not remember who and I have no idea who coined it but it went something like this:
The only time to pray for a rising market is when you are selling a company – when you are a buyer, the more stocks fall the better!!
Makes sense to me. Let the market fall and stay down for a while. I can then keep buying cheap stocks that are awesome companies. Then when it is time for me to sell, let the market rise like a banshee. We all know that the market does not work like that, but it talks to the line of thinking that when everyone is selling you should be buying. Like this kind of market we are in now. Take a look at your watch list, ensure the fundamentals are still strong, and go ahead and buy a little. If the market as a whole continues to drop, and nothing has changed with your company, buy some more. That way, when the market starts to turn around again (days, years?) you will be set up for success. That is the way I see it at least.
Mine was something that the late Louis Rukeyser said:
If your favorite fruit was a melon, and you found out melons were going on sale, you’d be pretty happy, wouldn’t you? And you’d buy some more. Why do people think that stocks are any different?
To me, this also sounds like the kind of things people say to reassure themselves. An analogy would be the guy who jumped from the tenth floor and says, as he passes the second floor on the way down, “so far, so good!”.
I don’t mean to insult. You seem very happy with your approach so you shouldn’t change a thing. I mean that more for readers who are not 100% sure what to do.
I took a different road by investing in a neutral manner, half long, half short, so as to have very little volatility but still double-digit annual performance. I just find it amazing how few people do that, given how successful it is.
Enough said, let’s make money!
I don’t understand shorting. Yet. That’s the main reason I don’t do the half long, half short. It sounds like re-balancing the longs and the shorts is an interesting experience, too.