When to enter the market?

We all know when to enter the market...as much as we know how to lose weight...


We just can't do it...


We don't have the discipline to follow the correct maneuver...


It's our nature to want to make money, and fast!


Those who invest, very often seek to make money within the next days, weeks or months at the most.


Only a scarce few actually have the patience to wait years, and that's the reason we don't make money.


If you have the slightest knowledge about the stock market, you have heard about "buy low, sell high"...


It is the highest law of the stock market, and I doubt anyone can rebut this.


But why don't you do it?


Instead of buy low, sell high... you often buy high... sell low...


Buy low, sell lower...


What is the rationale for these ridiculous maneuver?


I don't think you can rationalize it, because it is not rational.


It is an emotional move, therefore, not rational at all...


Why do you buy high and sell low?


Because you actually believed the stock you bought at a high point will go higher...


Instead, the stock dived after going slightly higher...


Why do you buy low and sell lower?


Because you cannot handle the stress of seeing the stock you bought dive deeper into the negative territory... You sell out so you can get a good night of sleep.


Let's examine the chart below, and get a better understanding...

This company have been a solid company for the past 5 years...


Making solid profits every year! and it is still continue to do so!


However, its government recently announced additional regulatory actions against it!


The government wants to make it less anti-competitive, so it would allow smaller company to thrive...


Currently, the company is trading at a discount of 32%...(32% off it's fair price)


How many of you would buy the company right now?


Probably none of you.


Most of you would be saying this....


Let's wait until the regulatory action is over before we invest...


When the regulation is over, the price probably shoot up, and you'll most likely miss the opportunity...


Some of you might say this...


"The news said this company sucks, I won't buy a company that the analyst is talking down about!"


Some of you might say this...


"hey, it looks good... but let's wait some more, looks like it can go lower, I like to enter at the lowest point"


This is the stupidest thing ever...


Because... "how do you know it'll go lower? are you God?"


Just because we're ONLY HUMAN... we cannot always chase the "lowest point" to buy, or the "highest point" to sell...


We don't fucking know when that will happen.


Because we're only human... we make the buying decision when it seems like an attractive opportunity... we can never find the perfect opportunity...


It simply doesn't exist.


The perfect buying and selling opportunity doesn't exist because we live in the presence...


We live in the now, and the perfect opportunity only exist when we look at historical data, the rear view mirror...


Let's look at the chart below... please tell me, without seeing the charts ahead...


"How do we know, that's the best buying opportunity?"




The honest answer is, we simply don't know.


And don't tell me craps like predictions or forecasting... because those are garbage...


One of the more interesting way to understand why forecasting or prediction is unreliable is to understand the Turkey story...


Here's how it goes...


The Turkey who was born in a farm, and was fed by the farmer everyday, 3 times a day for the past 1000 days...


As the turkey grew bigger, the amount of food fed to the turkey increases.


With 1000 days of historical data, the turkey is expecting to get the increased amount of food fed to it for the 1001 to the 2000th days...


The turkey even make charts of the past 1000 days, and showed in clear details how the chart has been accurate for the past 1000 days without error.


The forecast of 1001+ days is simply more food over the longer time...


When the 1001th day actually came, the turkey was slaughtered and turned into a frozen turkey dinner.


Is the historical data useful? can the Turkey ever know that it'll be turned into a frozen dinner by looking at historical data and make a forecast?


You get my point.


We cannot hope to have accurate forecast and prediction in a highly volatile and emotional market place.


However, we can look for the unchanging things in a rapidly changing market.


One of the unchanging rule in the market is:


"Great companies have a high likelihood of continue to be great!"

Well, this sounds contradicting to the turkey story...


I can assure you it is not...


Here is why...


The turkey assumes the 1001th day will be the same, but we admit that we cannot predict the 1001th day.


We can only invest diversely, and invest in companies that show clear indication that it is still in its 200th or 500th days....(such as high profit margins)


Sure, the turkey can still get slaughtered on the 200th or 500th days, we don't know.


Or better yet, the Turkey can be a pet turkey, and it can survive longer than 2000 days.


But the essence of the Turkey story is that we should invest diversely but wisely.


Buy at a low price on the greatest company, with the highest probability of success, and leave the rest to the unchanging laws.


When we invest in something with a high probability of success, the longer we wait, the more likely we're going to succeed.


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