>never catch a falling knife
>buy low, sell high
Ok so when the fuck DO I buy?
Never catch a falling knife
Joshua Torres
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Jason Baker
when it's low
Evan Foster
use your own judgment and hope you get lucky. you can never know for sure, unless you're a whale with other whale friends.
Jason Wright
Best advice I've ever heard: Ignore the Wall Street talking-heads (whose job is literally to convince dumb traders into buying stupid shit) and only invest in companies that you understand well enough to reasonably expect them to continue being successful.
ex.) Coca-Cola is a decent (not amazing, but very safe) choice because they aren't going out of business anytime soon. Same with Apple, Microsoft, etc.
ex.) HotNewStartup is an example of what not to buy, because it isn't very stable and you don't have reason to expect it to continue to be profitable.
It's about managing risk based on true market conditions, not just people's airheaded beliefs.
Aiden Carter
>Ok so when the fuck DO I buy?
You guess, like everyone else trying to time the market. You've got maybe a 50-50% chance of making a decent decision, so just go for it.
Of course, even if you get the buy decision right, you have to do the same thing on the sell decision. That's another 50-50% call, but maybe you'll get lucky again!
Of course, even if you get the call right twice, now your money is sitting idle and needs to be re-invested. So flip the coin and buy again. 50-50% chance. Then sell the new investment. 50-50% chance. Then do it over and over again all month, all year, and repeat for most of your adult life.
Granted, you don't have to make the right decision every single time. A few mistakes won't doom you, as long as you stay above average. So you only need to call the coin flip right at least 6 times out of 10.
Oh but wait, if you do that, you're only keeping pace with the index fags and at much greater risk and expense. So you need to do better in order to actually make all this trading worthwhile. So you've got to get that coin flip correct 7 times out of 10 to actually win.
Ooops, I forgot about all the fees and commissions, plus the taxes that can't be avoided with active trading. So you actually need to get the coin flip right at least 8 times out of 10.
Fortunately, there's an equation for those odds (binomial distribution) and we find out your chances of getting at least 8 correct calls out of 10 is only about 5%. Yikes.
And before you dismiss this little example as a made up hypothetical .... isn't it interesting that the academic research shows that only 5% of active traders outperform an index fund? 5%, just like my hypothetical. Makes you think, huh?
Cooper Stewart
Buy stable, profitable companies. Short meme companies like Twitter and Square with low growth or no profits.
Chase Barnes
>you have to do the same thing on the sell decision
Stopped reading here. Who told you we ever wanted to sell?
>active trading
Stopped reading here (twice). Nice assumptions again.
Nolan Ward
Also: OP didn't even mention he wanted to buy individual stock. His concerns, and your answer, still remain for anyone wanting to buy any index fund that's currently going down.
Is buying an index fund (say an Emerging Markets index fund) a coin flip?
Noah Diaz
>Who told you we ever wanted to sell?
Dunno, maybe it was "sell high" part in OP's post. Reading ftw.
Timing the market is timing the market. The investment or asset doesn't matter. And "buy low sell high" is timing the market.
Is this too complicated for you? I've done the ELI5 version, but maybe I can make it even easier to understand.
Jaxson Foster
If it's a first buy (and hold)
My opinion is you can wait as long as you want
There's no such thing as "missing out"
When you have the money you have the luxury of buying in at any time