Buy low, sell high.
By Tom McPhail | 30 Apr, 2008
Amidst the market volatility, and economic uncertainty it is interesting to looking at statistics from the Investment Managers Association on gross retail sales of investments. Going back to the mid 1990s, there is an obvious trend in investor behaviour.
By far the most amount of money in recent years went into the market in the year 2000, just after the peak in stock market values at the end of 1999. For the next three years fund values fell steadily. This meant that all those investments had gone in at the top, and had lost money – at least in the short term.
By contrast, sales of funds, and ISAs in particular fell to their lowest levels in 2003 and 2004, when the markets were bottoming out. Those investors who did have the courage to go in at a time when the market had been falling steadily for three years, were then rewarded with three years of strongly rising asset values. Past performance is no guide to the future, and particularly in these uncertain conditions investors should be prepared to see their investments go down as well as up.
I do know that Warren Buffet – who knows more about investing than most of the rest of the world put together, observed that ‘Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
