As reported in the media, inflation is rising. To put it simply, the cost of living is going up, up, up.
Contrary to “mainstream” strategy, which is to put your money in investments, I think the right way is to buy low sell high.
And it is my firm belief that prices are high now. Consumer goods are selling at high prices now, but so are stock prices & property prices.
How not to beat inflation? Easy. Invest in something and get “stuck” for a long time. Unless you know how to accept the pain and cut loss for bad investments, you’ll be holding on to bad investment picks that are fetching negative returns for a long time. This is of course assuming that prices have reached the peak, or are near the peak now.
To buy a stock, unit trust, or a property now is to buy near the peak. Ask yourself: When do you sell? Answer: You have to wait for a higher peak.
You could have done better.
Be patient. Wait for a downturn . Wait for the US to go into recession. Wait for the China bubble to deflate. Don’t be misled into believing that the world stock markets will reach record highs repeatedly and never go down. (See remisier king Peter Lim’s prediction.)
The best time to invest is near the bottom. And that happens only during the down cycle. Not when everything is fetching record prices.
Buy near the bottom, sell near the top.
So why do all the gurus advocate what they advocate? What they are saying is not entirely wrong, i.e. we should invest to get better returns. But it’ll be good if they perhaps also talk about the timing of investments. Ah, then they’ll surmise that no one can time the market and the like…