If you still have spare amounts from your savings after you invest in retirement insurance policy Malaysia, you might be thinking of spending some of it as an investment. Bonds, gold, stocks, and anything similar assets mostly follow the same pattern where bulls and bears come and go.
A period of optimism, followed by decline, and then a period where the market is stable but without significantly bullish or bearish. Even volatile assets like cryptocurrency follow this cycle, only more drastically.
Ironically, the period of optimism is a bad time for you to invest unless you know the way to dive in and jump out unscathed at the right time. If you are wondering why it isn’t to jump into the bandwagon right now, there are a few reasons, but the gist is that optimism tends to be equated to greed.
When people are greedy, they will buy more and more to drive up the price and hopefully gain a higher return. This can lead assets into bubbles, and it won’t really take long until the pinnacles of greed have been reached and the bubble bursts like a nuke.
Alternatively, the bubble may also burst if in the midst of a bull period, a sudden negative news pops out of nowhere and many investors quickly sell out of pure panic.
The 2008-2009 financial crisis is an example of this in which there are many believing that the housing market will never collapse. Combined with lax lending standards and cheap credit, the resulting batter is a big bubble that, when popped, greatly affected the market and a lot of lives.
Too late
If you already bought a lot of assets and have been holding on since, it might still be safe to buy more shares during the bullish period since even if the price is starting to drop further, at least the value of your invested funds would still be higher than during your initial entry.
If you have never invested before, however, you have to put your plans on hold because by the time you make up your mind, buy the asset and hold, it is already too late. The bears are already in place and in a couple of days or so, the price may fall. You could buy if you are day trading, but this is a risky move akin to gambling.
Low returns
Buying at an all time high is like shooting yourself in the foot because even with returns that are higher than your initial bought price, it will still be quite marginal. Bulls last shorter than bears, and it can only be a few days or so before the price falls. Only the bears can benefit from an all time high when they have bought the shares way earlier.
When facing the bulls and referring to the market’s all time high in its history, these bears are smart enough to know that a new high will not last long, thus in at best an hour after seeing the peak, it is time for them to check out.
So in conclusion, never buy an all time high. Follow the bears and buy while the market is uneventful or while it dips.
