JLM, that sounds easy, but it is very difficult to do. Selling at the top is no problem, but buying at the bottom is.
How do you know when a stock has reached bottom? Let us say it has come down from 100 to 50, how do you know that it is the bottom? Is it going from 50 to 100, or from 50 to 25?
Another problem is the psychology of the investor. In the current climate, when stocks are going down day after day, when there is more bad news every day, when experts are predicting doom and gloom till kingdom come, when they say that recovery may be years away, which investor will be bold enough to buy?
Well, I would, that is how I make money in the stock market. But there are very few who have the courage to buy when stocks are low. Normally what happens is, when stocks skyrocket, the investors get caught in the euphoria, and buy stocks because everybody is buying.
When six months or a year later, market plunge and experts start talking about gloom and doom forever, they get discouraged and sell. So many investors buy high and sell low. That is why many people don’t make money in the stock market.
Hi S.J.P. After the comment I placed a smiley- thought everyone might recognize it as a twist on a statement made by Will Rogers about 80 years ago.