The right price

The common adage in stock investment is buy low, sell high.

How low is low, how high is high?

If it is common sense to buy low, sell high, many investors would have made money in buying stocks.

For me, I also have some difficulty in determining the price of stock to buy and when to sell.

To buy - Once I identified a stock that I am keen to own, I would first comb the latest financial results to get the net asset value figure (NAV).

Once I get the figure, I would check the current stock price.

So if NAV is $2 and the price is at $1.50, I would be jumping with joy. But before I rush to buy the stock, I would google to see if I could get the historical prices of the stock for as long back as possible.

Using back the same example, if after checking the history, the current stock price of $1.50 is at an all time high, I would not make the buy. Because this would be akin to buy high in the hope that the price will rise even further which is a gamble.

The ideal scenario would be the history showed that the current stock price is either at an all time low or the stock has declined. This would signal a buy for me because this is when I can buy low and sell high later.

However, there is some caution here. Do not just buy into any stock just because the stock price is falling or at an all time loan. I had some selection criteria (which I have shared in my earlier post) to pick established companies with good track records. So on top of this selection criteria, I used the above methid to determine the price that I would buy the stock at.

To sell - in my early days of investing, I sold my stocks after making 30% profit.  When I looked back at my decisions, I regretted because I could have made 100% or even more if I had held them longer.

Hence now I invest monies which I could afford to hold in stocks perpetually without needing to sell. This gives me no time limit to realise as much gain as possible. It would be too stressful to try to make some gain with a set period since the behavior of the market is unpredictable and beyond our control. The greatest gain could only be realised if one is patient.