News

Not even the best investors can predict The Bottom: What they do instead

April 15, 2020
Blake Reid

author:

Not even the best investors can predict The Bottom: What they do instead

History has shown time and again that trying to predict the bottom of a bear market is usually both pointless and incredibly hard. 

History has shown time and again that trying to predict the bottom of a bear market is usually both pointless and incredibly hard. 

As an example, the bottom of the GFC came when no one expected it after several rounds of crying wolf. The Big Sell-Off in 2007 followed by a quick reversal looked like “the bottom” to many, but as it turned out wasn’t. Over the next two years several such bottoms were declared, all of them followed by more sell-offs. 

The advice of many investors and analysts such as Warren Buffett keeps repeating is to stop focusing on predicting the bottom and instead make a plan that will work regardless, and set yourself up for the longer-term. 

Warren Buffett has warned against buying a stock simply because of a belief that it’s going to increase in price. 

“Everybody when they buy a stock should be able to take a yellow pad” and write down why they want to invest in that company, Warren Buffett says, and that “you can have a separate piece of paper” for trying to predict what the stock market is going to do.

His investment philosophy, a philosophy shared by many other investors, is that buying a stock is really like buying a business. He believes it only makes sense to buy simple companies you truly understand and believe in, and that you want to own. 

Buffett famously said, ‘Price is what you pay. Value is what you get’. Some businesses will retain their value despite the current sell-off while others will not. 

The market might be going up right now but that doesn’t mean that we can’t still see more sell-offs. 

What if you could choose the lowest entry point over the next six months? 

We are introducing a new investment designed to give you exposure to the US tech sector. It has a mechanism that allows you to patiently time your entry. If the market goes for a run now you won’t miss out on current lows, however, if we see another significant sell off over the next six months there is the opportunity to choose the lowest monthly close price as our entry value. Register here for further information.

 

 

Any advice is general advice and does not consider your objectives, financial situation or needs, and you should consider whether it’s appropriate for you. The information we are giving you is for educational purposes only. 

Reach Markets are the advisors assisting with the management of this offer and may receive fees depending on whether an offer is taken up by investors.

 

Sources:


General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

Weekly Trading Sessions

Covering a market update, picking a direction and trade tips for the week

Leave a comment