buying low then selling high

Buy Low Sell High

Buying low then selling high is a basic strategy. If I get one more spam message about why I should be buying bitcoin, I won’t hold back on how totally backwards their logic is.  Think about it.  If somebody says you should by anything because it’s at an all-high, why would you think that’s a good idea?

 

buying low then selling highIf I told you that beef was at an all-time high in the supermarket, would you be loading up on beef?  ABSOLUTELY NOT.  You’d be looking for coupons, or buying chicken instead.  So why would it be a good idea to pay too much for an investment.

 

That which goes up must come down….

Did you know that the Stock Market was at an all-time high right before the Great Depression.  Did you know the Housing Market was at an all-time high before the bubble burst?

 

Buying into weakness, or as a market is declining allows you to stock pile an asset at a cheaper and cheaper price.  Even if your investment becomes totally worthless, you lose less when you originally pay less.  And markets tend to show that they tend to recover from statistically low points.  That’s why the stock market has recovered from 2008.  The same goes for the housing market.

 

Price and Yield

Let’s say you see two hot dog carts for sale.  They both make $50,000.00 a year in profit.  One cart is selling for $200,000.00, and the other is selling for $500,000.00.  Which one are you going to buy?

 

I hope you didn’t go after the “All-time high” hot dog truck because it would take you 10 years to make your money back.  The other would pay you back in 4.  So not only does buying low lower risk and increase profit potential.  It also gets you a better deal for assets that produce cash flow.

 

When the market dips, you can find better deals on dividend paying stocks, cash flow real estate, businesses, and other types of residual income assets.  You should by buying on sale.  As Warren Buffet says “Be fearful when others are greedy, and greedy when others are fearful.”  It’s the easiest and most vital concept to understand as an investor.

 

If you think buying low and selling high is difficult, we invite you to take a look at how we do it.

About The Author

herbertkoehler

I am a college drop out who found my passion as an investor. I love the many facets of finance, investing, and business. But even more than that, I love sharing what I learn with others.

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