The stock market is up one day and down the next. How should investors respond to so much volatility? The old adage buy low sell high is as true as ever. With the markets near all-time highs keeping your eye on your investments and knowing when to sell or take profits is the key. Knowing when to buy and sell is a tough game to play. Too often investors will allow emotions to take control.
So when is the best time to buy or sell? When is the market overpriced or underpriced? Buying when others are selling will normally give you the best chance of buying at a discount to overall market values. It takes guts to buy when things look bleak. Most investors buy at or near the tops when everyone else is buying. Patience and waiting for market pullbacks will often yield the greatest rewards. Work with a professional or do this on your own but please don’t follow the crowd. Buy on bad news sell when euphoria and irrational thought prevails about a bullish market.
There are a number of indicators that you can follow to see where the crowd is moving, such as daily volume comparisons, money flows, and the relative strength index. Take some time and learn to invest on your own or hire a professional to help you.