Thursday, March 20, 2008

A Conversation with a Long-Term Investor Part 1

Here is the common conversation with a Long-term Investor:

Them: I am a long-term investor.

Me: Oh really. So you bought Stocks when you were 13 years old and you are going to sell them the day before you die?

Them: (smiling) No, not exactly. What I mean is, I buy stock in my 401K every paycheck and I don’t touch them or worry about them… I guess I will sell them when I retire someday.

Me: So, you want the market to crash shortly?

Them: Why do you say that? I want the market to go higher!

Me: Well… let me explain. The way to make money in stocks is to buy low and sell high. Now you don’t establish your buys on price; but on time. You buy every two weeks at pay time…and you sell at retirement. That is buying because of time – not price. So, what you want is the market to crash… accumulate stock then on every paycheck day at cheap prices.

Them: (standing there with a dumb face look and quiet).

Me: Something wrong?

Them: No, I just never thought of it that way.

Me: Well, you are a time investor. Strange trading strategy I must say. Excuse me, I must talk to someone… nice meeting you.

To be continued....

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