The simplest route to investment success is to buy low (when the market/target investment is low) and to sell high (when the market/target investment has risen). It works every time, and you can certainly understand this on an intellectual level.
BUT - when the market actually goes low/high, your emotions get in the way. The way that you FEEL about the market will often lead you to a completely inappropriate action, because of the emotions that these market movements produce.
This graph is the best explanation of the cycle of market emotions that I have ever seen (thanks to WestCore Funds for making this available to me). It is easy to observe that the true (scientific, that is) points of market risk and market opportunity do NOT coincide with the correct emotional mind-set. As someone said, the stock market is the only market where, when things go "on sale," no one wants to buy!
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