The Paradox of Investing

Disclaimer: Please note that all content and information in this blog are for educational and informational purposes only and should not be taken as professional investment advice.

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The Paradox of Investing: If people know how to make money by buying low and selling high, why so many people still lose money investing?

Because they buy when they think it is low and they sell when they think it is high. They believe the asset is low and hence buy. They believe the asset is high and hence sell. Issue is not with the methodology of buying low and selling high but with one's perception and evaluation of what is truly low and truly high. 

A misalignment in one's perception of low and high with reality results in investors losing money — selling when they think it is high and buying when they think is low. What matters is not what they think but what it really is. Because high and low are subjective, it depends on one's perspective and evaluation of what truly constitutes low and high. For some people, low could be 10-20% from ATH while for some people it could be the rock bottom, similarly with high. Both low and high are inherently subjective. Your definition of what is low and high must align with the market, or at least align as closely as possible, to be profitable in the long term.

We must calibrate our perspective of what is low and high with reality. The closer we align our perspectives and definitions of high and low with the market, the more likely we are to be profitable in the long run.

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Disclaimer:
The content and information provided on this blog is solely for educational and informational purposes, and should not be construed as financial advice. The accuracy or completeness of the content and information provided in the blog cannot be guaranteed. Before making any investment decisions, it is important for readers to research and carry out independent verification of the information provided, or consult with a qualified financial professional. No warranty and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of actions taken based on the ideas or information found in this blog.

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