Buy at the time of maximum pessimism and Sell at the time of maximum optimism” ?
When a company announces earnings disappointment or a slow-down in growth, Analysts downgrade the stock, and Wall Street freaks out and says, “Sell, sell!” To the average investor who bought the stock at its high of $40.00 and watched his stock gap down overnight and fall to 30-20-15, it signaled the end of the world. In his mind, this stock was going to 0. In panic, he sold his stock at 15, and that so happened to be the low. A few months later the stock recovered back to $40.00. On the other side of the same trade, sits a smart investor. He is a risk/reward kind of a guy, and is in the habit of buying ONLY when there is a SALE going on. He doesnt care about a stock when its at an all time high and consensus is very optimistic; he is looking at his down side. He has seen plenty of great companies crash on earnings disappointment. He has learned his lessons. Instead, he is waiting for a sale, and when it does, he starts accumulating, slowly building a position. Funny enough, after a fe
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- Buy at the time of maximum pessimism and Sell at the time of maximum optimism" ?
