Is the strategy of buying low and selling high a good plan with stocks?

Answer 1

yes, this is the basic principle of invesments. its called value-investing. try to read up on warren buffet and/or graham. they have become the best investors in the world because of this principle. try to purchase stocks which are highly discounted from their intrinsic value. then sell them when they are above the intrinsic value.

Answer 2

Yes, but for some odd reason many investors do exactly the opposit. They see that a stock has gone way up in price and they think that it will continue to do so and they buy into it. Then the stock begins to fall in price. They think that the price drop is just a small correction. The price continues to fall and they tell themselves that they are in the stock for the long haul and everthing will work out in the end. They tell themselves the company is sound. After the stock has finally lost 3/4 of its value they finally sell it, just when it has become a bargain again.

At the moment stocks are on their way to becoming bargains. In a couple of years, they may be like they were in 1975 selling at 5 times earnings.

Answer 3

It is a simple good plan, but it can be hard to do well as the answers above suggest.

But it is not the only good plan. Buy stocks in large high quality companies that pay high dividends. Then setup your account so that the dividends are automatically reinvested in the stock (called a DRIP). This way you pay no commission on the reinvestment. Then hold the stocks forever. Well, almost forever; or maybe your kids can inherit them.

Read the book by Jeremy Siegel & consider the ETFs at www.wisdomtree.com

Answer 4

Ummm, would you really want to try the alternative of buying high and selling low?

There is a lot more to it than adopting the right mantra but you have identified the key to stock investments. The implementation of that strategy is the hard part...

Answer 5

Yes, you want to buy low and sell high. However, it could take years for stock to go up it all depends on what you are buying. You shoul follow the stock market and see how the stock has been doing in the past.

Answer 6

Yes if you have the psychological makeup for it. David Dreman has made a career out of buying "out of favor" stocks. One of several books Mr. Dreman has written is "Contrarian Investment Strategies in the Next Generation". Just because a stock is low does not make it a good buy. For example, the home building stocks now, are they a good buy? Toll Bros. (TOL) at 25.14 down from a 52 wk high of 51.72, is this a good buy? It passes the test of being down, but is homebuilding going to catch fire again? No opinion from me on this, but Mr. Dremen is a good source of information on the difficult strategy of "buying low".

Answer 7

Well, it's a much better strategy than buying high and selling low!

Answer 8

it is always a good plan to buy low and sell high on anything. but you have to study behave of the market and little big of dig up research to know when. Study TECHNICAL ANALYSIS and FUNDAMENTAL ANALYSIS. for example, you grow the tree and one day the fruits is ripe for harvest, if you don't do it. you waste of your time and money. the idea of buy low and sell high is exactly the tree axiom

Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 71,000.00 and 30000.00 in taxble account. by follow simple rule

Answer 9

Assuming you have a method of defining HIGH and LOW, with criteria you develop. Once you begin to define what you consider HIGH, and LOW, you can attempt to run your plan on paper to test it.!!

HOA told you the right way to go about it !!

Good Luck

Answer 10

you have to study the market and the company in which you want to invest