20 August 2007
The current stock market is like a roller coaster ride.
At the moment shares go down.
The experts sound confused.
Well, predictions are hard to make, especially those about the future.
- Is this the start of a big crash?
- Or is this just a temporary dip?
I am under the impression that the stock market bubble burst just after the stocks reach a new all time high.
This is easy to see with a history of stock values.
Looking back is much easier that predicting.
How long ago were stocks this high?
Buy low, sell high
Making money with stocks seems so easy.
- Sell with profit when stocks are high.
- Buy cheap stocks when values are low.
The top graph shows green for historically high values.
The greener the more historic.
Stock market high values don't last for ever.
After historic new heights, lower values follow.
The more bright the green, the better a moment for selling.
- Dark green means the highest value at that moment, but there was a higher one just before.
- Light green means the highest known value for a long time.
The second graph shows those moments to sell.
High means a long time ago to find a higher stock value.
A sequence of new highs show a clear diagonal.
A similar story for historic lows.
The lower the value, the better the moment to buy.
Long term plan
Those with an abundance of time can earn most at the stock market.
As on average shares rise, it is prudent to wait with selling.
On average tomorrow is a better day to sell.
The best moment for sales is just before a crash.
The purple moments, buying low, are sparse.
Stock market crashes are rare, hard to predict, but obvious when they happen.
So, those who wish to earn a lot of money with stocks are celebrating a rare big crash.
At last: a fine moment to buy a lot.
By default the graphs show
the recent Amsterdam stock exchange index.
Upload the history of your own favourite stock value and see:
Is now a good moment to buy?