{"id":7861,"date":"2014-07-11T14:23:49","date_gmt":"2014-07-11T21:23:49","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7861"},"modified":"2016-12-21T07:27:59","modified_gmt":"2016-12-21T15:27:59","slug":"buy-low-sell-high-easy-know","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/buy-low-sell-high-easy-know\/","title":{"rendered":"Buy Low Sell High? Easy If You Know How"},"content":{"rendered":"

Markets\u00a0are interesting beasts. In a sense, they are purest form of capitalism, a space where all that matters is transactions.<\/p>\n

According to investment researchers, the sheer mass of buying and selling going on in our capital\u00a0markets\u00a0means that prices reflect, all the time, the actual value of the underlying companies.<\/p>\n

\"buy<\/a><\/p>\n

People take issue with that idea, and I understand why.\u00a0Stocks\u00a0sometimes are\u00a0bid way down or way up<\/a>, depending on the emotions of shareholders. That’s a powerful force.<\/p>\n

It’s also an utterly unpredictable one. There’s no reason a stock you bought has to go up or a stock you hold can’t continue to go down. You might disagree with the direction of your holdings, but the fact remains that prices are set by others.<\/p>\n

And that, in the simplest, non-mathematical terms, is what Modern Portfolio Theory is all about. Prices are accurate because there is no alternative universe in which the valuation of a company is different from the minute-to-minute tick of its stock price.<\/p>\n

You can be given stock, perhaps, as compensation, or earn it through a company program. You might inherit it free of taxes. You could, potentially, trade stock in one firm for shares in another, as companies sometimes do in order to merge.<\/p>\n

But if you have to buy or sell in an exchange, the price is the price\u00a0at the moment you decide to get in or out<\/a>, end of story. Whatever happens\u00a0next\u00a0won’t change the price you paid, and that price was in fact the “value” of the company at that moment in time.<\/p>\n

So how to do what all investors want to do, which is to buy low and sell high? It’s disarmingly easy.<\/p>\n

Automate it!<\/strong><\/h2>\n

First, own a portfolio of investments, one which includes\u00a0stocks, bonds, real estate, commodities and foreign equities and debt.<\/p>\n

Next, make sure the portfolio accurately reflects your ability to withstand the ups and downs of the markets. You don’t want to be scared out of an investment for no reason.<\/p>\n

Finally, let the market does it’s magic. As some assets rise in value, you sell off a portion of them to buy those that have declined.<\/p>\n

You can keep track by measuring the percentages: If you expect to be\u00a060% stocks and 40% bonds<\/a>, but the balance right now is more like 65\/35, you sell the extra in stocks and buy bonds till you’re back in a 60\/40 balance.<\/p>\n

That’s selling high and buying low, automatically, and it’s the path to a better, more reliable long-term return.<\/p>\n","protected":false},"excerpt":{"rendered":"

Markets\u00a0are interesting beasts. In a sense, they are purest form of capitalism, a space where all that matters is transactions. According to investment researchers, the sheer mass of buying and … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7863,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[8],"tags":[],"yoast_head":"\nBuy Low Sell High? Easy If You Know How | MarketRiders<\/title>\n<meta name=\"description\" content=\"So how to do what all investors want to do, which is to buy low and sell high? 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