Is Buying Low and Selling High Wrong?

The reason we invest in anything is that we believe we can increase our savings. For many years, investors have been told that the key to riches is to buy low and sell high. I believe that is foolish advice, and I’m here to put in my two cents.Everyone knows that markets ebb and flow, sometimes wildly. Conceptually, if you could time every peak and every valley with absolute perfection, you would be able to unlock unheard-of riches. The problem with this concept is that history and statistics are against people who try to time the market. In investing circles, it is known that the underlying reasons people want to time markets are called investor myopia and risk aversion.Investor myopia is a focus on the short-term instead of the long term. Symptoms of investor myopia include looking at your stock portfolio and prices every day to see how they performed and constantly entering and exiting stock positions on every wind of news. The main problem of myopia is that it lowers the overall return on investment, and as a result, reduces certainty more.Risk aversion is the proven fact that we feel pain twice as much as we feel gains. A symptom of risk aversion is that you are excited when your stock portfolio is earning money, but you want to pull everything out to cash the moment that you see a potential problem. You also see this when your co-worker brags about his ‘wise’ investing when an investment is skyrocketing, but you don’t hear from him once the investment plummets.To avoid these common investing traps, it is recommended that you (1) only invest in strong companies with a wide moat, (2) turn off the news, and (3) only look at your stock portfolio 1-2 times a year. Investing can be an emotional tug of war—mastering your emotions elevates you from a novice to a wise investor.