There is old adage of investing – buy low, sell high and you will make money. For most of us that is hard to do because to actually buy low you need to travelling up river or against the current. We see many trends in the industry and to buy low is to buy when valuation of a good stock is low and expectations for it to do well in the next quarter is also low. The trick is to know at some point the market will begin to increase the expectations of the stock to do well and this will push up the multiple which pushes up the stock price.

It is relatively easy to be seduced into flowing with the river so what are strategies to try to buy low and sell high. One always start with the best of the breed companies.

Tom Bradley of Steadyhand Investment Funds recommends to have a Strategic Asset Mix in place or SAM. The SAM lays out how your portfolio will be allocated across different asset types. It is a road map that give you a long-term perspective and ensures you do not get caught in the latest trend of the investment industry. The idea is to put restrictions on your asset category or your purchases have to be truly diversified. For example if you love energy stocks not more than 15% of your portfolio, not 50%.  Another tip is the investment industry can easily make new products, before you buy one of them ask yourself how will this implement my strategic asset mix and why is the new product better than what I already own?

Linking to dividend paying stocks, part of investing in these companies is they are profitable and should be once you own them. If you keep your investments in profitable companies over the long term you will do well or not lose money, because profitable stocks do not lose as much when the stock market goes down for when they go to a lower multiple, the dividend ensures institutions will buy the stock for it is a bargain.

There are more questions than answers, till next time – to raising questions.