In our last class, we went through the principles of Buy, Sell and Hold. These three “actions” are what we can do with stocks. Personally, I have never been involved in any form of stock trading whatsoever, and the concept of so I decided to do some more readings on techniques on when I should buy, sell or hold.
Basically, everything on the net told me how I should buy low, and sell high. However, I analyzed some graphs and it appeared that the best option in fact, was to buy low, and NEVER SELL. Based on both graphs attached below, it showed that even though the market fluctuates, goes through periods of ups and downs and even depressions, the market would always recover and surge beyond its previous “high”. When we look at the S & P Stock Price Index, we can infer that there were times that individuals would have been tempted to pull out because of fear of losing even more money. This is especially true during the Great Depression but look seventy years later in 2010 (and this is after the recent crisis in ’08), and we can see growth of more than tenfold! The market has exhibited a capability experience new “ups” after each “down”. No matter how many “downs” there were since 1900, the slope of all the points on the graph is still positive.
We can look at it as an excellent return with no fees and zero effort on our part, but then again, who would be of the investing-age in 1900 and still be alive now?
