Investing 102

[GregWeld]

Today's "market" is why I buy on DOWN days... because all of a sudden the market goes crazy UP.

There's a statistic - and I'll get it completely wrong -- but for an EXAMPLE only -- the statistic says that the market moves UP 10% of it's total for the year on only 2 or 3 individual days. If you miss those days - you've missed a big percentage of the year.

So those numbers are completely wrong but the point is that if you're not "IN" already - then you've missed the move - and the moves come and you're never going to know when that is.

Generally the market will move DOWN 15 minutes after you buy...

NOW -- THE CAVEAT.... AKA "Warning"

The major difference for me as an INVESTOR has been the mindset rather than the numbers. As an INVESTOR I EXPECT the market to go down - I totally understand that there will be periods when I'm getting my azz handed to me... regardless of how smart I think I might be. These periods might be weeks - or maybe 3 or 4 years! I'm totally prepared for that MENTALLY and CASH FLOW wise.

My point is -- you don't invest money that you are / might - going to need... so that you're not forced to sell in a down period. You need to be able to hold during the down periods in order to get the gains.

I used to freak out when the market went down 200 points -- or most of my investments were RED... and as soon as I'd trim some (sell) the very next day the market would move HUGE and I'd be kicking myself. There was never a "signal" that the market was going to move like that...

Now -- I've learned to keep plenty of cash for living on... and I invest the rest - I get paid those pesky dividends which just seem to keep on coming - and I've learned to buy when stuff goes down. When I do that... I look really smart on the few big UP days of the year.