It is a very simple thing. Let’s say today the market or the stock you want to buy is at 100. You wait for it to come down to 80 before buying. There are essentially only three things that can happen.
- It comes down to 80.
- It falls but does not come down to 80 but maybe 85 and then reverses and goes up again to 120.
- It does not fall at all and goes on to 120.
In cases 2 & 3, you will miss the boat completely.
In case 1, in the majority of cases, the discourse around the stock or the market will be so negative when it falls 20% that you may be scared to buy. You will then say let it stabilise and then I will buy. Then the stock suddenly reverses and runs up. Having seen the price at 70, you will find it difficult to buy it at 80-85-90 during the runup.
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