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  • Writer's pictureBob Brooks

Are Stocks On Sale?

Everyone has heard the old saying when it comes to stocks: “Sell High, Buy Low!” But can that advice be taken out of context? In the car the other day, I heard an investment advisor marketing his investment firm on a commercial. He said something that caught my attention and created the need to send you the other side of the story.

DISCLAIMER – THIS IS FROM MY MEMORY AND NOT WORD FOR WORD. However, the context of the marketing is accurate. He said, “As a financial advisor, I can’t guarantee anything except one thing. You should always buy stocks when they are low (in price), and today, stocks are on sale! So the conclusion is that stocks are a good buy because they have lost some money, and stock prices are definitely lower.

There are a few things worth noting. First, the commercial should have stopped right when the spokesperson said, “as an advisor, I can’t guarantee anything” because that is a fact. I’ll note this again for emphasis: an advisor cannot guarantee anything. Here is the question that an investor should have when listening to the advice of always buying stocks when they are lower:

Are they still a good buy if they lost an additional -30% more in value?

I believe investors are all on board to buy stocks at their low points. However, most investors I know would only do so if they felt confident that stocks did not have way more to lose.

As I have always said, there is a big difference between an opinion and a fact. It is the advisor’s opinion that stocks have gone low enough to warrant buying: facts you can guarantee and opinions you cannot. Time will validate that opinion one way or another.

Keep in mind that traditionally, bear market cycles can last a lot longer than our current one and incur much bigger losses. Low can always go lower, making that guaranteed advice not so guaranteed.

Visit the Prudent Money FAQ page to learn about how you can work with Bob as your Financial Advisor. Schedule a consultation today by emailing or by calling our office at 972-386-0384 X 206


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