It's axiomatic on Wall St. to "buy low and sell high," but some say "buy high and sell higher." Who's right?

Question

Chicago money manager Richard Driehaus, who some consider the father of momentum investing, says more money is made "buying high and selling higher."

Answer 1

It's pretty much the same thing. It's all relative.

What Driehaus, rightly, suggests is that by investing in a proven winner, you have a good chance of riding along with it's contined success.

But it's not that simple. "Buy low, sell high," assumes that the low price investment will grow. But we all know that they don't always. If it did, EVERYONE would be putting all their money into penny stocks.

"Buy high, sell higher," assumes that the purchase will appreciate in value. But, we all know, especially after the dot com bust, that some stocks peak out and drop, often without any warning.

Not eve Richard has that magic eight ball that tells him the future.

Answer 2

Depend on your tolerance for Risk Look at Enron, Lucent or a lot more used to be darling of the high fly stocks. What is fly high, may come down hard.
With the basic value approach, buy low ,sell high is always the mantra of fundamental value investor. The famous one is Warren Buffet
with Buy high,sell higher approach. You need real-time information to deal with when to sell.. If you do not have real-time information. Your risk is many fold and you put your investment at risk

Answer 3

Buy high refers, more than likely, to large cap stocks rather than small cap or mid cap stocks. Large cap are expensive to purchase (buy high - ExxonMobil for example) but odds are pretty good they will at least retain their value, or go up in value. I still prefer "buy low - sell high" simply because more people can invest in lower priced stocks which puts more money into the market. There are as many philosophies about this as there are birds of the air and I am sure you will get many conflicting answers.

Answer 4

the advice changed into the ideal decision, the translation can be a general liberal reaction to associate the be conscious "intense" in connection with a monetary transaction as intending to "get intense" before promoting, and then blaming the end result on a conservative.