Saving A Fortune for Canadians: Part 4 of 5

‘Buy low, sell high’ is a mantra that is as obvious as it is hard to adhere to. Those who subject their investing pattern, whether in stocks, real estate or anything else to this discipline, tend to be a lot wealthier. And those that don’t leave themselves quite vulnerable to holding the can.

Take for instance Amazon stock, up more than 50% in the last year. Yet still down on its price since the 1st of September 2020, some seven months ago, which was the end of a strong six-month bull run in which prices increased at a more than just a notable rate.

The trick is to be aware of the frenzy and panic as prices rocket or collapse. When prices are high compared to their historical trend, that’s a good time to think about staying away from the market. Yet it’s precisely at this time that every Navin, Dick and Javed is harrying you about investing or bragging about what they’ve managed to earn.

In similar vein, when those prices have fallen sharply, as a golden rule, you should be looking at getting in. And as you’ve guessed it, the aforementioned multi-ethnic fraternity is shell shocked, mute and broadly has the look and feel that you don’t want. Yet, it’s precisely because they look disheartened that buying makes most sense.

There’s a term for this – contrarian investing – buy or sell when the market isn’t. You might think how obvious all this sounds. It’s amazing just how few people keep at it though.