Have Realistic Expectations

Forget about buying a stock, a fund, or an index at the bottom or selling at the top. Yes, somebody does, but that elusive somebody will never be you. The truth is that after you buy a stock it will go lower — not sometimes, but always. And when you sell a stock, it will always go higher. It’s not bad luck or bad timing. It’s simply unrealistic to expect that, competing with thousands of other players, you’re going to be smart or lucky enough to get the very top or bottom tick.

If you know ahead of time that it’s going to go lower after you buy it, why not wait? The reason is because if you do and the stock goes lower, you’ll want to wait some more. But then, at some point, it’ll turn around and you’ll be left on the sidelines. The best you can do is to buy in a reasonable buying range, know that it’s going to tick lower after you buy it, but also know that you have a position in the stock and will benefit when it goes up. Don’t be disappointed when this happens. It happens to everybody. It’s part of the game.

Also worth remembering: In more cases than not, stocks go down faster than they go up. The likely reason for this, at least in part, is that the emotions that trigger selling are felt more intensely than those that motivate buying. It’s usually more urgent to get off the train than to get on.-Dick Davis