We all enter the stock market with a long-term view. But how many of us hold the investments during the bear phase? Seeing the Volatility which is quite natural in the market, we tend to exit from our investments in the stock market during down-turn.
This is due to un-controllable emotions of the human kind. We wait for the corrections and when there is a furious correction, we get afraid to invest more. This is the natural tendency of the humans.
But stock market winners – “Buy on Dips” and “Sell on Rallies”. They closely watch the price movements during rallies and pick them at “Cheap Price Points” during down-fall. They don’t get tensed during market corrections and when ever they feel the stock is available at cheap valuations, they added those stocks in their portfolio.
This is the exact thing to be done in the stock market. But in reality, many investors do the opposite- purchase the stocks when the market is in rally and sell them when there is a downfall in the market.
This differentiates winners and losers in stock market. Great investors stand on “Buy on Dips” strategy, but retail investors “Sell their stocks in down-fall” assuming the market would fall further and their investments will erode.
In any one of stock markets across the world- “Those who buy stocks on dips” would resulted as a great investors by creating wealth to him and his family.
When does “Sell on Rallies” work?
Wealth creators not only purchase stocks in dips, but also sell them at fair prices. They do this only when they think that “The stock market is over-valued and in anticipation of the market fall in the near future.”
Whenever they think that the stock prices are over-valued, they “Book some profits” with a view to re-enter the market when ever the market slips.
This is not practically possible for all! Only experienced investors with their past experience can implement this strategy.
If you want to be successful investor in the stock market Follow- “Buy on Dips; Sell on Rallies” . This is practically difficult in your initial years of investment journey, but slowly you can gain experience, with that expertise you can master this skill.
As a whole- “Buy on Dips and Sell on Rallies” is the success mantra followed by many great investors and if you want to be one of them, you can exercise the skill slowly by investing small amounts in the initial years and by experience, you can implement this skill too!