“Buy when most people. . . including experts. . . are pessimistic, and sell when they are actively optimistic.” Benjamin Graham, quoted by Sir John Templeton.

“Investing is easy,” a neighbor remarked to me one Saturday while we stood in her front yard chatting.

“Really?” I responded.

“Sure, you just buy low and sell high.  How hard is that?”

“Not hard at all.  Just most people do the opposite.”

The advice is simple to understand.  Incredibly difficult to follow.  When the stock market is hitting new highs money pours in as people fear being left behind.   And when it’s crashing to new lows investors race for the exits.  Many know to “buy low and sell high,” yet in real time do the opposite.  And the result?   Decimated net worth.

When the stock market began crumbling in the fall of 2008 panic set in.  I received a steady stream of phone calls from clients who needed reassurance.  The media hammered audiences with “end of the world” messages.  People were scared.

A few clients wanted to sell as the market went lower.  I talked them out of it only to watch it ratchet down more.  One client called me when the market hit new lows in early March and said, “Sell all my stock accounts.  I want out.  I don’t think the stock market will ever recover.”

No questions, no discussion.

We sold everything—four days before the bottom.  Just before the market turned and started going almost straight up over 60%.  Sold low, bought high.  The exact opposite of what “everyone knows.”   He’s still out and will never make up his loss.

Another client received a small inheritance about the same time.  She was afraid too but we discussed it and I told her, “What an incredible opportunity.  It’s perfect for investing this money.”

We began investing it slowly, one sixth of the total per month so it would be invested at the end of six months.  Every month we discussed it briefly on the phone.  She was concerned though not scared.   And every month we put more in.  A couple of times she was uncertain and waited a few days to “think about it.”  But eventually she would call me back and say, “OK, let’s invest it.”

Her investments have nice gains.  It was tough but she “bought low” and reaped the rewards.

But how do you do this? How do you have the ability to “buy low and sell high” when every instinct is driving you the opposite direction?

The bible says, “Dear friend, guard Clear Thinking and Common Sense with your life; don’t for a minute lose sight of them. . . . You’ll enjoy a good night’s sleep. No need to panic over alarms or surprises, or predictions that doomsday’s just around the corner, because God will be right there with you; he’ll keep you safe and sound.” (Proverbs 3:21-26, The Message)

It comes from your focus.  Your belief guides your actions.  If you had known that in six months the stock market would be up over 60% from its low you would have bought.  People bailed out because they believed it would get worst.

That’s why the bible tells you to guard your thinking.  Guard what you believe.  Keep focused on the underlying truth that God, not your portfolio, will ultimately keep you safe.   It’ll give you courage when there are predictions of doomsday.  The result will be “a good night’s sleep.”  Now that’s peace.   And with that peace comes clarity and direction.

A couple of ideas to help you.

First, fill your mind with God’s promises of protection, guidance and blessings. The Bible is full of them.  Read particularly Proverbs for practical advice and encouraging promises.  When you fill up on those rather than bad news you will have an underlying faith that strengthens you.

Second, fill up on facts about investing successfully. Read books and articles by those who have been successful over many years through good and difficult times.  You’ll see that all of them have invested through very dark periods and made tremendous gains because of it.

Third, and most important, when you are faced with fear choose faith. Choose to believe what God has promised you.  Choose to trust he is guiding and blessing you.  And when you waver, in difficult circumstances, choose to still believe.  That confidence will give you clarity and courage to take advantage of the opportunities you have.  And that faith unleashes all of God’s blessings.

“Buy low—sell  high.”  Pretty simple, right?

Let me know what you discover.

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Series is based on “16 Rules for Investment Success” by Sir John Templeton, legendary investor and money manager.

Important Disclosures:

Douglas Armey, the LPL Financial adviser associated with this website, practices in Fresno, California and may discuss and/or transact business only with residents of the following states:  California, Idaho and Oregon.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results.

Securities offered through LPL Financial, Member FINRA/SIPC.  Member of Securities Investor Protection Corporation (SIPC).  For an explanatory brochure please visit www.sipc.org.          www.finra.org