Catching a falling knife and buy low and sell high, both sound dangerous!

Buy low and sell high sounds is a famous quote often attributed to successful people. But is it really good advice or is it actually dangerous or at worst foolhardy?

Source

I mean in the real world when the price of an investment is falling or when something is selling near or at an all time low how wise it it to buy? And do you or I have the “intestinal fortitude” or “the guts” to buy at the low?

Let’s look at an interview of one of America’s most popular and respected billionaires; Warren Buffet how he got rich. He was asked if he believed in “buy low and sell high”.

Here are a few of his answers:

First one:

“Most people get interested in stocks when everyone else is interested and the price is high. The best time to get interested is when no one else is interested and the price is low”.

“Look for good companies, with low prices and buy all you can afford, using money you can afford to lose.”

Second one:

“You can't buy what is popular and do well."

Surely we all can see the wisdom in not buying when things are near their all time highs and waiting for the pullback is taught in most stock and asset trading classes.
This makes sense, when Bitcoin was above 16000 it was very popular, but also near its all time high. Steem was also popular above 4$ and extremely popular at $8.00.

Third;

“Investors should try to be fearful when others are greedy and greedy only when others are fearful."

I can see how this one plays out also. When Steem was 8 dollars and Bitcoin was 19,000 dollars, everyone wanted to own them, but when Steem dropped below a dollar and Bitcoin dropped below 10,000 dollars people sold off and moved to other investments. But now that Steem is below 20 cents US, how many people are loading up on it, because they see its potential as a successful project longterm?

Conclusion:
I think the secret is finding good companies, when their not popular and their price is low. I think his phrase “Be greedy when others are fearful and fearful when others are greedy” ... is insightful. Bitcoin had more investors at a price of 16,000 USD then at a price of 6400.00 USD. The people who bought at $6400 are still ahead and those that bought at $16,000.00 USD are still behind. I think buy low in crypto means buy on the dip. And I try to buy on the dip with all cash I can afford to lose at the time. Even if I buy 1/10 of a coin at a good price I am still ahead. I think you need to be patient and wait for the dips. It’s easy to buy at the high due to the fear of missing out “FOMO” this is a real force in the trading world, which we all must keep in check. One of Buffets quotes I keep in mind when I am dealing with FOMO is

“The stock market is very efficient at transferring wealth from the inpatient to the patient”

I don’t know about you, but I think this quote was about FOMO and quote was made before the term FOMO was invented LOL 😂

REMEMBER....knowledge is power, power helps you achieve wealth, and wealth frees you from the cycle of trading time for money. It gives you your time or life back.
Free yourself.

✍️by Shortsegments.

References

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shortsegments
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