The market goes through periods of volatility. We’ve seen it before and we’ll see it again. For me, it’s all about learning from this experience and coming out of it a better and wiser investor. Notice how you’re behaving and acting during this period.
I know the way I’m feeling during this volatility is much different than my emotions and behavior in 2008 and 2011 and 2015 and 2018. I learned. And I will learn from this one as well to prepare me better for the next go around. I encourage you to do the same.
Today I want to talk about how, “Bottom fishing can be hazardous to your wealth”. The goal is not to try and catch a falling knife (see here why), but to buy on the way back up.
It’s a lie that you have to buy low and sell high. I’ve found it much more helpful to buy high and sell higher. I’d rather pay more knowing that the trend is up, than trying to be a hero and be the first one in. Notice how we didn’t get bearish stocks until late January, after they had already been rolling over for a couple of weeks, instead of the whole way up last year like many others?
So how do we know stocks are on their way back up? I really like the percentage of stocks above their 200 day simple moving average. This is an indicator that gets quoted a lot in bull markets, but for me, it’s most helpful at the end of bear markets. [Read more…]
