When it’s time to buy, you don’t want to

Sillamae Estonia 2023

The title originates from Walter Deemer who had a 52-year career as a market analyst in Wall Street. I haven’t read his books, but the quote gave me a few ideas to think about.

The main point is probably tied to the fact that people don’t want to buy stocks when prices are falling and fear has gripped everyone. On the other hand, people don’t want to buy stocks when prices have already rallied and seem expensive. So when should one buy a stock? When it’s flat going nowhere?!

To me the entry point doesn’t even matter. I have momentum strategies that buy into strength when price seems to be “expensive”, but I also have mean reversion strategies that buy into weakness when “blood is in the streets”. The exit matters much more. It’s the selling point that shows either a win or a loss. Entry alone means nothing, but tied to an exit gives me the expectancy to make money. Basically, one can buy a stock anytime, but when will it be sold? Entering a trade without the answer is a gamble. People like to gamble.

So what am I up to myself in the market these days.. I’m running a portfolio of 10 strategies in a semi-passive fashion, meaning it only takes me around 30 minutes a day to go over things that have mostly been automated. People think that trading takes a lot of time, but honestly I probably spend less time compared to active investors going through balance sheets and valuations. I don’t look at screens nor analyze charts during the market hours. The market is there to work for me, not the other way round.

From time to time I get a new idea to backtest, but most ideas don’t have much merit. It’s actually hard to come up to something new that’s appealing cause I’ve tested lots of different things through the years. I have also helped some people through Zoom calls to build their own rules-based ways of managing investments, to limit risk and increase returns. If you’re interested in active investing and haven’t yet read the Mentoring page, then I suggest you do that.

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