Dollar Cost Average – Market Bull or Bear

Nobody can time the market. It’s true. No one really knows when a bull market has topped or when a bear market has bottomed. And it takes a lot of mental energy and time to figure out the near top or bottom levels. Is it really worth your mental energy if you plan on holding onto a stock that you believe has the greatest potential in the long term?

Well, another method that you can consider is to dollar cost average. It is basically an easy way for anybody to save and invest without much thought.

You basically set a plan, for example, to put in $100 per week irregardless of the price. Whenever a stock is increasing in price, you will buy a little less stock. And whenever a stock is falling, you will acquire more stock.

Many people get greedy and think, why can’t I just put a lump sum amount at the lowest price, to get the highest potential? Well, it’s not easy to time the market. You never know that the money that you have invested is really at the absolute bottom, or it will fall further down in price even more!

A simple strategy is to dollar cost average, and buy for the long term. If you have studied and analyzed the fundamentals, all you need to do is to have faith. Believe in yourself, and believe that in time, you will be able to acquire more stock and the price level will increase. It’s not going to be fast, it’s not a one month, or two months duration. It may take years and even decades.

It takes a lot of disciple to put in your hard earn money every week to accumulate a stock that you have full faith in it that it will increase in price over the long haul.

There are 52 weeks in a year. Depending on your budget, you can plan to allocate $100 or more per week. Sometimes you can also invest every month instead of weeks. For $100 per week, you will have invested about $5200 per year.

It takes a lot of disciple and faith to dollar cost average. It’s a better strategy than placing a lump sum, as the risk is lower. It’s never too small an amount, if you start to invest. A small sum of money can grow into a large amount of money with time.

Trading Emotions

Let’s face it. Trading involves a lot of emotions. When it involves money, everything is emotional. That is no wonder why charts and patterns repeat always. And history repeat itself. People always think that, this time it’s different. How different is it actually? Not really.

How market cycles always work and will always work, is due to human emotions. Believe it or not, even if you are saying you do not trade with emotions, you are actually in denial. Everybody cares when their entire life savings is on the line. Everyone cares even when people say they are only putting money that they can afford to lose. It always revolves around emotions.

Whenever there is a bull run – the herd mentality

Whenever the stock price is rising, people get excited and fear of missing out (FOMO), therefore they will buy when the price is increasing. And people feel that is the right decision and will dump their savings and feel dumb if they do not take out loans to buy a rising stock. However, little did they know that smart money is starting to dump their stocks. Smart money with huge amounts of money can influence the media. They will share “good news” in the media so that everyone will want a piece of the action. But when the enthusiasm is diminished, the stock price plunge. That starts the end of the bull market.

In a bull market, people will feel that they are smart, able to double their money in a short amount of time. Some people even start to think of retirement, all the money that they have accumulated, when they can quit their job.

Denial and Hope

After taking huge loans, people will keep holding on to the stock, in hopes that it’s only temporary and it will rebound soon after this. Whenever a stock dips a little, some even take out more and more loan, thinking that it’s a good deal as the stock price will surely go up again.

However, the stock continues its downward pressure as the smart money is still selling.

Soon, emotions take over. Then there is denial, pessimism, panic and then capitulation. The general public will feel how stupid they were to invest everything and take on margin to buy a stock. They regret and feel dumb. Everybody sells during this period.

That’s the time when it’s a sale for smart money. Smart investors will grab these cheap stocks on discount from weak hands.

Ending of the bear market

Right after the weak hands have sold their stocks, price will rebound from buying by smart investors.

Soon, there will be hope, relief then optimism.

Here goes another bubble, and the cycle repeats.

Trading – It’s not easy, Learn more about yourself and your emotions

Let’s face it. Everything is not easy in life. Trading affects everyone. It require a high mental attitude and discipline. It involves a lot of patience. A market can take a very long time, even a decade or more to bull. And it can take only a few seconds to tank into bear territories. It is extremely stressful, and it will affect everyone around you.

You may or may not notice, but it will definitely affect your emotions. Whenever a stock rises in price, you will feel confident, happier, and nothing can stop you. And whenever a stock falls, you feel that you are stupid, life is not worth living, and the most depressing moment in your life will occur.

It’s not easy to control ones emotions when trading the stocks market. And it takes lots of time and patience to learn about a market. There is no easy way in life. There is no overnight millionaire or success that comes easily. It’s always the behind-the-scenes of people enduring despair, patience and hope that many do not see. People only notice the successes, but do not notice the hardship and hard work.

Trading & Life

Trading is stressful. People feed all sorts of ideas into their own minds when a stock bulls or bears. Always remember to never lose yourself. A stock price is not a valuation of you. A stock price increasing in price does not mean that you are smart and a stock that is falling does not mean that you are a failure.

Always remember that there is a second chance and third and so on. There will be plenty of opportunities in life, if only you are patient and learn from your mistakes. It’s not going to be easy, but will it be worth while? Only you can decide by yourself.

Full of opportunities

In life, there is plenty of opportunities, if only you can stop and open yourself to view them. It’s no use fooling yourself that the world is falling down and everyone is against you. Cycles occur, and like it or not, history do repeat itself. Everyone thinks that, this time it’s different, but is it really so?

Always remember to be humble in life

In life, there are ups and downs. When you have acquired a fortune, always remember to be humble. Do not overspend and waste on unnecessary splurges. Always remember to keep some money for a rainy day, you might never know when the day will come. And fortunes can overturn in a matter of days.

It may take a decade to accumulate and only a single day to lose it all if you are not careful. Whenever you feel that you have accumulated quite a fortune, always consider to diversity. Diversifying is one of the ways to preserve your fortune and reduce your risks.

Do not despair

Always believe in yourself. Believe and have faith. Have the patience to endure a loss. It’s not really the end of the world. We can choose in our lives. Life is like a game, in which everyone plays. Everyone is born and live to work to accumulate wealth and then dies. It’s not the destination but it’s the journey that matters. In the end, what do you really live for? Money, health, famous or happiness? Whatever we do, always remember that we always have a second chance and we can always start all over again. Be humble. Life is worth living.

Investment Quotes

Nobody can time the market or buy from the very bottom. Dollar-cost-average!

Investing takes time and patience, if everybody can do it, everybody is rich.

Investing involves emotions, there will be bull and bear markets.

Buy low and sell high, but it is not easy. If it is so easy, everyone will be rich.

Controlling your emotions is key to investing. Do not follow the herd.

Buy when everyone is selling, sell when everyone is buying. Be greedy when others are fearful, and vice versa.

An investment is a long term journey, it takes not 1 year or 2 years but sometimes decades.

Don’t plan to beat the market, nobody can time the market. Stick to your plan and be disciplined.

It’s easy to buy items that are on sale, but it is not easy to buy a “discounted” stock/ investment.

It’s hard to buy items that are increasing in price at a stall, but why is it easy to buy stocks rapidly increasing in price? Why FOMO (Fear of missing out)?

Never lose yourself. Never be too over the clouds when winning and never despair when losing. Life is after all a game everybody plays, and in the end everybody dies.

Even if you have lost it all, you can always restart. Be humble and start again. It will not be easy. Remember that. 

Planning takes time, and lots of patience.

Money makes money. Never trade your time for money.

Live not to impress others, but just be happy yourself simply. Do not overspend on things you do not need to impress the people you do not like.

Hold on.