We have all heard the adage “Buy Low and Sell High,” but how does that play out in real life? Can anyone time the top and bottom of the market? We do not believe it is possible. So how do we ensure that you are buying when prices are low and selling when prices are high? Let’s look at a very current and relevant example:
Toilet Paper…Yes, I said toilet paper! Earlier this year I bought a 30-roll pack of Kirkland Brand 2-ply Bath Tissue from Costco as our household was running low. The $19.99 price tag seemed reasonable compared to other stores I had shopped. The VERY NEXT WEEK, Costco put out their monthly advertisement and offered $4 off the same product I recently purchased. Being the economically consumer that I am, I stopped back and picked up another 30-roll pack.
Was I happy that I had toilet paper for my family even though I paid full price? Sure, I needed it. I was even more excited when I got it on sale! Fast forward one month and now I am REALLY glad I bought all that toilet paper! I have seen people offering up to $5 a roll on-line!
So what does my story about Costco brand toilet paper have to do with the markets?
Why does your thinking change when it comes to stocks? It is something you need to meet your long-term goals. It was full price a month ago. Today it is on sale for 25% off, so why are we not stocking up? Could it go on sale some more? Sure! But if you see it on sale, buy more as you can always sell to someone for $5/roll!