Buy high and sell low...

Why do people buy high and sell low? On other forums and here I've seen people give "noobies" suggestions of buying high and selling low... That just makes no sense. Could someone elaborate why that is such a good thing to follow?

 

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Is this even a serious question?

 

I guess I don't understand. What thread are you eluding to? What possible justification would somebody have to advise a noobie to buy high and sell low? Who on earth would not see that sort of advice as asinine?

Now if you're talking about a noob that has previously purchased gold/silver when it was near record levels, and is now asking how to sell it (understanding that they will end up losing money), then I don't see a problem with that. Many people on this board took a hit buying gold and silver a couple of years ago, and has seen the value drop quite a bit.

 

Can you link to an example here on CT that you are thinking about? I think you know the answer just by asking it, if what the others already said hasn't been enough to point you to the direction you're instinctively feeling already, that such advice, if one can call it that, is bogus.

Are you possibly referring to people who buy at any price to "support" physical and have such a belief in metals that they feel some much greater price will make anything seen in recent years cheap by comparison?

 

Because they buy the herd narrative: "no one knows where the top is." Why does it matter that no one knows? If prices keep spiking your getting closer to the top wherever it happens to be. Which can only mean there is less distance to the top and so less reward available and more risk inherent. Or an upside down risk/reward ratio.

If some become troubled with that they might convince themselves that: "this time it's different." If they really start to worry there's: "we're in un-charted waters"-hey it's an adventure; lap it up! Or they may see that it's a bubble but they'll get out in time. Not sure how that one works. Does an angel appear in the night and tell 'em to close out by certain a date?



Pity it was written in 1954 because, you know, "this time it's different."

 

Chris

 

Yep, that's the one.

 

Dang Longnine, am I feeling weird today or is it you? I completely agree with your post in every way. In fact, I have written similar on here as well. Its almost NEVER "different this time", and the moment someone utters those infamous words it makes the hairs on the back of my neck stand up. Some people were saying that when silver was $40 an ounce on here, saying, "everything is going to hell so its different this time". Probably the same people were talking in the 1990's, "silver will never again be a monetary metal so it's different this time and silver will remain cheap forever". This sentiment made me buy more in the 1990's, and it warned me the price would crash when it got high a couple of years ago. You are completely right, ignore those who believe macroeconomic forces change permanently overnight.

Momentum investing, or pretending you believe "its different this time" CAN lead to great profits, but only to a disciplined investor who knows that line is not true and will always be three or four steps ahead of the crowd.

Right now the crowd pretty much hates pm. Not "the crowd" here, but the public. Personally, I am happy since I like buying pm and am buying now. I love being a contrarian. It has brought me the best investing "luck'.

 

"...I completely agree with your post in every way..."

Oh great, now the planet is going to explode today.

The very first contrarian:

"Strength becomes weakness,
weakness becomes strength."
Sun Tzu

I know you read him OCS.

 

Humans are herd animals, so we perceive something to be safe if everyone else is doing it. I remember hearing "you can't go wrong with real estate" just before the real estate bubble popped. The same thing happened in 2011, when I heard a newbie say "you can't go wrong with silver". I stopped buying for a while. Now that everyone seems to have given up on silver it may be a good time to start buying again.

 

Yes sir, I am "lucky" I worked 50 hours a week and paid my own way through college, I am "lucky" I paid $50k for my graduate degree, and I am "lucky" I get to work 60 hours a week. Its amazing how "lucky" people usually end up doing better in life. I really feel sorry for those who drop out of school, wanting to eat twinkies on the couch rather than work hard at a job. They really do just have bad "luck", poor souls.......

 

They confuse "being lucky" and "being fortunate". Those who can't see the difference will always be the ones on the outside looking in, and blaming the world and not themselves.

 

Where I work, we "Techs" often feel like Sales is giving away the house by not charging appropriately for custom work. I like to point out humorously that "we loose $5 on every one, but we can make it up in volume".

Rob

 

I must have misunderstood when people would say "buy high sell low", maybe they were saying that people years ago bought high and are now selling low because they don't want to wait for it to go back up? I don't know, you all can just ignore this thread now. What a stupid question lol.

 

I think people were simply commenting on how many investors always do the wrong thing. This trend is so common as to be one of my most important indicators, I look to see what small investors are doing and try to do the exact opposite.

 

Oh for a wire tap on Buffet's wall..........

 

Buffet doesn't invest in metals. As a voting shareholder I get his annual portfolio statement (which is usually a 300+ page book).

 

Buffet had a lot of silver back in 1998. He had to sell it all:
http://goldandsilverblog.com/warren-buffetts-view-on-silver-0458/