Cheap stocks can always get cheaper, particularly when the market direction is bearish. Which is why I don’t “dumpster dive” when I invest and why I don’t try to catch a proverbial falling knifes.
If you want to decrease your risk and increase your probability of success, wait for an uptrend to be in place. If your investment thesis is correct, you can afford to be patient and wait for your moment. Yes, you’ll miss catching the absolute bottom. But again, that’s fine. No one consistently calls exact bottoms of the bear market … not you, not me and not even legends like Warren Buffett.
Today, let’s dig deeper into why momentum investing works. To understand this, we have to remember what the stock market is. It’s not a black-box machine. It’s a collection of millions of investors just like you and me, and each of us is watching the moves of the others in real time.
Stocks rise because there are more buyers than sellers bidding the price higher…
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