The Stupidest Reason to Buy and Sell

Amar Pandit , CFA , CFP

Warren Buffett gave the answer to the first part of the headline…

What do you think is the reason?

He wrote, “The stupidest reason in the world to buy a stock is because it’s going up.

Couldn’t there have been a better answer?

I don’t think so…The truth is that this applies to every investment whether it’s a stock, bond, mutual fund, or any other.

What do you think is the stupidest reason to sell?

I know you got this one…

The stupidest reason to sell is because the investment price is going down.

Don’t you think so?

A sketch comes to mind as I write this…

Some other stupid reasons to buy…someone else bought it and made money, I got a tip from a fellow who knows what he is doing, overconfidence and many others.