When Everyone Zigs, You Have To Zag

Yesterday, I watched the market drop over 600 points as investors were unloading their equity out of sheer fear. It’s never fun watching your portfolio drop by tens of thousand of dollars in the span of an hour, and like many, I was tempted to sell just stop the bleeding. But then I reminded myself of a personal investing rule.

When Everyone Zigs, You Have To Zag

Instead of selling, I asked my wife to transfer more funds into our trading account so I could start buying. After all, the market was on sale! You make money by buying low and selling high. However, most investors buy when the news is great and prices are high, and sell when the news is bad and price are falling. It’s pretty hard to make money that way.

I look at a market crash as an opportunity to pick up some cheap stocks. Apple dropped to $351 yesterday. Today, it closed at $374. Those who sold yesterday are kicking themselves today. And the smart investors are thanking them for selling. 🙂


70 thoughts on “When Everyone Zigs, You Have To Zag”

  1. Michael says:

    Those are some great tips John! I’ll have to keep that in mind whenever I think about getting into the stock market!

    1. i agree 🙂 those are some smart tips.

      1. PPC Ian says:

        Awesome post, John! The fact that you are gaining/losing tens of thousands in a matter of hours just goes to show how large of an investor you are! 🙂 I would be curious: What type of stocks/investments are you buying these days? Any favorites? (Perhaps could make a great future post.) Also, do you typically invest for capital gains or dividends (or both)? I’m totally obsessed with investing and always really excited to read these types of posts. Your advice is certainly solid, but hard to follow at the same time since investing can be emotional when so much $ is on the line. Well done!

    2. Yes if you want to diverisfy your income than stock market or bullion trading is also one good option.

      Provided you have fund and youmcan keep it whrn price is going down. Not for those people who forced to sale on same day because of lack of fund.

      1. PPC Ian says:

        Good point ZK. Bullion is certainly a great way to hedge your bets based on the current action of gold. As volatility increases in stocks, the price of gold has been rising to new records. A combined strategy of equity in companies with a hedge in precious metals could make sense for many investors. My only worry, however, is the price of gold has run up so much that I’m betting it’s due for a correction at this time.

    3. Never lend money your shares to buy more shares, then the bank forced liquidation of stocks, them when the market goes down like yesterday.

    4. That’s the basic fundamental, those who buys at down sliding market called bear and other one bull.

    5. sucks for those that decide to bail out to quickly ,when the going gets tuff the tuff gets going..

      1. PPC Ian says:

        Very good point! It definitely does. In times of turmoil, it’s often a good idea for emotional investors to take a step back, stop looking at the quotes, and then revisit in a few weeks/months. Typically, things will work themselves out.

  2. I have made some money this way in India. I’m not a big investor but i make decent income from share trading.:)

    1. fazal mayar says:

      thats great ashish, i wish i had better knowledge on this.

      and catchy title john.

      1. Even few people who bought shares when Satyam hit to rock bottom now having great time, almost double their investment.

        1. That’s correct, this week was a winner if you knew how to take advantage of it.

  3. Sometimes you have to think outside the box and do things the regular people wouldn’t do.

    “Black Seo Guy “Signing Off”

  4. I Like the title and the simple yet very useful tips

    1. Yeah agreed, This is an interesting article to encourage more visitors.

      1. Best invest advise from a Make Money Online Blog…

        1. there are a couple of sites which you watch you can stay in the loop. I enjoy the Yahoo! finance site, this keeps me in the loop most of the cases.

  5. Essays says:

    It is difficult to find out what is the best time to buy. May be, we buy more and market drops again.

    1. Do not worry History is showing that share market is always on rise. So if you have capability as investor than pick the blue chip share and you will get good return.

      I would say that you should keep at least 10% of your liquidity into gold.

      1. Correct ZK, The stock market topped up every month with new pension savers money from insurance companies and banks.

      2. Exactly, all Indian knows that.

  6. MykeTech says:

    Nice advice!

    Whenever you take advantage or make the most out of an okay situation only good things can come.

  7. Yes if you have fund than you can enjoy this kind of state but there are many investors who do the business for same day hence they forced to sale.

  8. Not easy to do, but discipline is the key to trading. There are some great opportunities out there these days.

  9. When we start doing what everyone else is doing, it’s time to change.

    1. If everything is coming your way, may be you are on the wrong track…

  10. Virtual Tour says:

    Thinking outside the box is key to making big money online!

    1. Yes this is quite applicable in every field.

    2. That has always worked. My take on thinking outside the box is catching trands before they hit. There are some news which appear to be trendy but not picked up yet. If you can publish blog posts on those, it is a winner.

  11. That’s a great motto to live by John, thanks for sharing!

  12. Justin Dupre says:

    Great tip! when something sells at a low price you definitely have to grab the opportunity to get it.

    1. Gift Ideas says:

      I like your great tips.
      thanks Justin Dupre.

  13. Hi John, well said and this is the exact policy which anyone should follow when markets are down because thats the best time and price to get hold of some good scrips. I did the same during last week and current week when Indian Stock market has been going through a turmoil. Keep investing even in small amounts but on a continuous basis because that helps in long run for sure.

    1. Also invest in physical gold.

      1. Near Diwali gold will touch 27k to 30k

  14. No doubt great tips by John. I like this most your information is too useful for me.

  15. & this is a fantastic advice for everyone & smart investors too.

  16. I like that saying…when everyone zigs you hae to zag…LOL

    point made…;)

    Mark

  17. fas says:

    And Apple was going to hit 500$. When a stock goes up, everyone becomes bullish!

  18. i have not earn much but few by trading

    1. I wish i could rake in some money on the table…

      1. great if we earn some amount through our blog

  19. Brock Blohm says:

    Gotta play the game wisely. The tip you just said is utterly true. Surprising how few people recognize this…

  20. Brian says:

    You should have shorted a few stocks while everything was sliding down. You could have made money twice.

    1. Even if you missed the short, this week had some great long opportunities.

  21. Olefin says:

    wise move John, they’ll come back up

  22. Erwin Miradi says:

    Stock market isn’t really my thing. But that was a good information though..

  23. The problem is when the market drops that much it looks like a great buying opportunity but you don’t know what’s going to happen later. Yes, it could recover it did the very next day but it could also go down further as it did the day after. Studies have shown it’s impossible to “time” these buy/sell moments. It’s better to go long on stable company you believe in. I bought Apple back few years ago at $100, watched it go up to $150, then it started to drop. I sold it at $100, not go lose money. Then, I watched it go up to $205 to get in again. Since then, regardless of whether it goes up or down, I decided to just hold it no matter what. And I’m still holding it.

    1. Good decision, Apple is a winner in the long run.

  24. Lela says:

    I like your strategy and I have heard this before from people who invested in the stock market but I have to say in times like these with everything rippling across the world so drastically, I would probably go against this rule. It just seems like things are going to get worse and I wonder if they are going to change so much that the old will not survive.

    1. Yeah Lela agreed & i also like strategy & who does not like it..!!

  25. Yes, there is huge shuffling in market these days. Hopefully, market will bounce back.

  26. Erik says:

    “I look at a market crash as an opportunity to pick up some cheap stocks. Apple dropped to $351 yesterday. Today, it closed at $374. Those who sold yesterday are kicking themselves today. And the smart investors are thanking them for selling.”

    Right on the spot John! Actually, this is one method which Warren Buffet (the great American investor) applies in his investment endeavors. People in the late 60s and early 70s were curious as to why he keeps on buying stocks despite the slow down of the exchange market. However, his investment mindset is fixed on a long-term approach; he knows that he will eventually earn with his stocks in the long run, as well as beat inflation. I actually apply this investment style when I invest in the mutual fund that I am investing in..

    Kudos to you John!

  27. Helen Neely says:

    Nice article. Despite being in the online business for almost a decade, I have never thought about buying shares and stock. I guess this is the time to start investigating it.

  28. Now, you do not have to ask your wife to transfer funds to your trading account since market has been bounced back.

  29. The dipping of United States’ market affect on BSE too.

  30. All Commentators giving very informative comments to this post.

  31. zig zag combination really informative for all

  32. Thanks for explaining how to proceed with an work by zig zig combination

  33. Informative article and explanatory as well.

  34. When everyone zig, you have to zag. This article justify this statement.

  35. Market clash is common these days.

  36. Amani says:

    How about future and option, by investing in these instrument, you can still get benefits of it if either market is increasing or decreasing.

  37. sometime in business ups and downs will be there we should maintain it

  38. Dress Making says:

    Zig and Zag can be found on business but how we are handling are the important one

  39. Eddie says:

    Your example is a great time tested principle in stock trading. Also be sure that you have a stop-loss amount mechanism for your stocks.

  40. who2india says:

    It is something that could be followed, but surely with cauthion.

  41. Gift Ideas says:

    Nice sharing here. Thanks for sharing.

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