Wednesday, August 19, 2009

Why stocks are the great money making tool in the economic deflationary time

For decades, we are familiar with the concept of "Buy and hold". Warren Buffett is considered to be the greatest investor of all time. But this is not true. He was only great in time of Bull market. For bear market, it is a different story and he is not great any more.

Buy and keep the stocks is the best strategy to invest in the stocks when the market is going up (Bull Market). This is true as from 1980 to 2000, we experience sthe longest bull in the history.

But for now, and for many years to come, as the general stocks market going down "Buy and hold" means "Buy and lost!"

The good thing when the market going down is that the stocks move up and down in "wild" swings. This is good opportunity to make money through buying and selling securities. So now is the time to "Buy and Sell" not "Buy and Hold"

As such, when the stocks go down, we must use the strategy "buy low and sell high". Of course, the key point here is to identify the time of purchase and sale, this clearly is not easy task and it is also one of the purposes of this blog.

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