"No warning can save people determined to grow suddently rich" - Lord Overstone

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Larry Cyna

Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist…

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Patience and Waiting for the Drop in the Market

A Simple Way to Maximize Returns

People make and lose fortunes in the stock market.

Those more adventurous trade stocks with varying degrees of frequencies. They use trends, or signals, or technical analysis, or just guess and use their instinct as to whether a stock will rise or fall. The gain or loss is triggered when the stock is sold (if previously bought), or bought (if previously shorted).

Others invest because of long term value. The investor expects the stock to rise in value because it either appears undervalued currently, or is expected to increase in value in the future.

Other invest to get income, and buy dividend yielding stocks, or REITS.

Investors using these and variations of these methods have varying degrees of success.


A Different Way to Invest

There is another way to invest. It is amazingly easy, and requires no specialized knowledge. It requires no advisors. It requires patience. Lots and lots of patience and little else.

Dow 1988 2013 big
Courtesy big charts.com

Examine the chart to the right which shows the Dow Jones average over several decades. It shows a distinct long term uptrend. But on closer examination, it shows another pattern. At numerous points along the way, the DJIA had dramatic falls in value.

If you would have bought the simple average in September 1998, and sold it when it as soon as it stopped its meteoric rise, you would have made a lot of money.

If you would have bought the DOW in February 2003, and sold it when it stopped its meteoric rise, you would have made a lot of money.

If you would have bought the DOW in March 2009 and sold it when it stopped its meteoric rise, you would have made a lot of money.

The examples abound everywhere. Whether you look at the DOW, or the TSX, or the Income Trusts, or any other sector, you will notice a similar pattern.


Patience is the Key

If you want to make big money, stay out of the market. Be patient. Whatever sector you like, will rise and sooner or later, will tumble on a temporary basis. When it tumbles, fear will pervade the market, and the losses will mount, as always. When the tumble is finished, buy that stock or that sector.

Don't hold forever. Be happy with the big gain. When the rise starts moderating, sell. SELL. Take your cash and park it waiting for the next tumble. The next tumble will always come.


Risk is Moderated, Gain is Maximized

Pretty simple isn't it? Everyone knows this happens, but people can't sit and wait. The urge to put your money to work is overwhelming. The smart investor, does nothing but wait. Usually once or twice a year, a minor tumble will occur. Every 3 to 5 years a major tumble will occur. Be smart. Live easy. Live stress free and wait for that magic moment.

 

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