Buying On The Cheap

There are some basic investment rules. Unfortunately, human nature being what it is, people do the opposite of what they should.

For example, a major rule in investing, as in other things in life, is to buy good expensive things when they go on sale. It's like when Albacore tuna fish goes on sale at the supermarket. Folks buy a lot of it because they know the price drop is only temporary and in a day or two the price goes back to where it was. Smart shoppers stock up by the case, or certainly as much as they can.

During the economic depression everything got knocked down in price. Some stocks were already depressed and went even lower and some very good companies got crushed, along with most great mutual funds and ETFs. Great companies got sold off because hedge funds and investors were selling at any price just to get liquid or to pay their bills. It was a pandemic and common sense went right out the window.

The people who kept on buying and are buying through a systematic investment plan, such as a company sponsored 401k, will eventually find, probably sooner than later, that their accounts will be back to where they were before the folks who stuck their head in the sand or those that stopped buying completely when things got ugly- and cheap.

The simple rule is to keep buying funds and ETFs, especially during dips and down market cycles. You don't get many opportunities in life to buy quality cheap.