Chasing The Market & How To Not Putting Money In The Bank

Chasing the market is another common fear. You see a share you were thinking of buying go up in price. Your plan says you buy cheap at your price. Your fear of missing out takes over and you jump into the market.

Inevitably, you buy on a price peak and the price of the share starts coming down. Why? Because all of the people like you, suffering from fear of missing out syndrome have bought their shares and there is no one left to buy. With no buyers around the share price must come down.

You can practice jumping into the market all you want and see how far it gets you.

After a while you will see the losses you are making as a result of indulging this human emotion.

You will see that this is losing behaviour when you review your own investments and will illuminate it from your repertoire. Result : your rate of return will increase.

Think about it. You only ever make money when you sell a share. Not when you buy it. When you own a share its price varies all the time and so any unrealised profit you may have is academic and of little real value until you sell it.

How many times have you already seen unrealised profit vaporise into an unrealised loss. Once sold and the profit realised, no one can take it away from you.

You can’t pay for a new car or go on an overseas trip with shares. It is the money that you make after you sell the shares that buys you what you want.

If you never sell a share you will die with shares in your estate. That is great if you objective is to pass you wealth over to your survivors. But if you are inclined to get value from your share investments whilst you are still living, then you will have to sell to achieve that.

• Practice buying and selling shares that are going up in price. Shares never go up or down in a straight line, there are price dips and peaks along the way.
• Practice selling on a price peak when the share price is high, only to buy it back when the share price is cheaper.
• Practice selling the share to get the money but also continue to participate in the growth of the share. That gives you the best of both worlds.

About the Author

Learn more about Successful Investing or download more information here . Phil Wengier has been successfully investing in financial markets for over 30 years and is the owner of several companies. In particular, Saratoga Pty Ltd has been on the Internet since 1996 helping many who wish to discover how to invest safely and successfully. Feel free to subscribe to my Savvy Investor newsletter here