| When the stock mat moves in one direction or | | | | should be holding their stocks instead. That's right - |
| another, there are conflicting ideas about what you, | | | | study after study has shown that those who hold |
| the individual investor, should do in response. The old | | | | their stocks as the market tumbles come out ahead |
| adage that you should always buy when others are | | | | when it recovers! |
| selling - and vice versa - is a good first principle, but | | | | Like lemmings off a cliff, the herd's activities as the |
| what about those times when the fundamentals of | | | | bulls exit the market are not conducive to developing |
| the companies being bought or sold don't justify | | | | a sound investment strategy. Everyone who follows |
| following that adage? For those just learning how to | | | | the herd suffers the same fate - and economic |
| buy stocks, the mentality of the herd can easily take | | | | losses - that the herd suffers. If you learn only one |
| hold and cast rational thought out the window. | | | | thing about how to buy stocks, learn this: never |
| Massive selloffs always drive down stock prices, | | | | follow the herd. Rigidly adhere to your set goal of |
| which should generate bargains provided that the | | | | buying low and selling high, and you will weather the |
| underlying fundamentals of the company are sound. | | | | storms that cast others about like ragdolls in a |
| Yet, many investors apparently don't understand | | | | hurricane. |
| how to buy stocks with a "buy low, sell high" | | | | The best part is that the market always recovers. |
| method. In fact, in nearly every market downturn, | | | | That means that if you have held your stocks while |
| you see hordes of investors rushing to sell | | | | others fled, you will be in a superior position when |
| everything they own. | | | | the recovery happens. As stock prices rise, the herd |
| The flaw in that approach is that they are invariably | | | | that sold low to get out of the market will charge |
| selling in response to the downward spiraling market - | | | | back in to buy as prices are rising. And therein |
| which means they are selling as prices are dropping. | | | | appears your opportunity to sell to them at the high |
| In other words, they are selling low when they | | | | rate that fits your strategy. |