Chapter 91: If the Market Has Already Risen, How Should One Buy?

Source: https://www.facebook.com/100063294665283/posts/751499836969832/

[James Origin and Today] Chapter 91 - [Ask: The market has risen, how to buy] (12/19/2023)

On June 11, 2023 (Sunday)

Hello, Teacher James!

I saw the teacher’s YouTube channel for the first time in mid-February this year, and I started to buy QQQ one after another from then on. I also asked the teacher some questions when I was experiencing the stock market turbulence. I am very grateful to the teacher for his patient answers! My plan is to buy out all available funds (retirement accounts and brokerage accounts) within half a year. Because I was timid, I was very cautious when I first started buying, and I didn’t buy much every month. It wasn’t until May that I felt that the price was rising too fast, and the 100-day moving average had exceeded the 200-day moving average, so I increased my efforts. Currently, I still have 450,000 uninvested in my retirement account plus brokerage account. And QQQ has risen to about 355. Sometimes I really want to buy it in one go, so I don’t have to keep looking at the stock market to think about whether to buy it or how much to buy, but it is difficult to make this decision. After all, the price of buying it in February was 290-300. I would like to ask the teacher how to overcome the psychological contradiction and how many times to buy with the remaining funds?

Thank you!

James replied:

Generally, friends who start investing will be cautious and buy slowly bit by bit. Because they are worried that the market will fall in the short term, they are cautious and fearful, so they buy quite little at the beginning. If the market is falling, they dare not make a move. When the market starts to rise, they find that they have very few wheat ears in their hands, and they start to realize that it was a big mistake to not buy a lot at once.

To be able to buy everything immediately, you must understand the first principle of investment: "The market will always rise, and long-term investment in index funds will definitely make money."

If you can invest in index funds for more than 20 years, your return rate will be at least 6.5% without losing money. This is already better than most investment performance. Therefore, the investment index will not lose money in the long term.

Whether you buy it at $350, buy it cheaper before at $330, or buy it next week at $365, if it rises to $3,000 in 20 years, the performance of the three buying prices will be similar.

Annualized return for $330 purchase 11.66%

Annualized return for $350 purchase 11.34%

Annualized return for $365 purchase 11.10%

If you buy the above three at any time and at any price, you will make a lot of money. Only those who do not buy will always lose money, so don't stand on the platform all the time. You will only start making money when you get on the platform. Those who stay on the platform will never make money.

So if you want me to recommend how to buy [understand the risks, know the risks, control the risks, keep cash, have emergency reserves, buy all index funds immediately if you have money, buy them at any time, and never sell them until you die. 】

James