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...highs. The dictum buy low/sell high is perfectly rational.
However, market conditions are always uncertain. Fluctuation is the mechanism of price discovery. Markets fluctuate perpetually: whether they are moving sideways, upwards or downwards. Sorting trend from fluctuation is only possible when trend is established--in other words, in hindsight--and the end of trend is likewise only clear given the advantage of history, i.e. too late for investment purposes. Even when a trend has been established, there is no certainty in real time when trend falters and turns that a market has reached a high or a low: highs can go higher and lows can go lower. Nobody rings a bell.
To complicate matters, human beings are both rational and emotional creatures. Sufficiently rational to think of 'buy low/sell high' and assent to it, and sufficiently emotional to want to do the exact opposite when market conditions become extreme. Fear of loss makes people shun investing when markets are falling; indeed, the more a market falls the more investment-averse people become. On the other hand, rising markets induce lust for gain, and the more markets rise the more achievable gain seems; the higher a market goes, the more people want in....
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