never buy too cheap too easily

while going thru

"reminiscences of a stock operator"

i came across a line

"i don't buy any stock too cheap too easily".

i was surprised!

i tried but couldn't digest it.

how can someone say no to buying something too cheap and too easily?

the more i tried to understand the reason behind this

the more it eluded me!

had the statement come from a modern-day business-channel expert

i would have moved on long ago.

but since it came from

"boy plunger"

after traversing some 100 years

i was desperate to get behind the veil of the statement.

i kept wrestling with the question

and finally cracked it.

--

why do we buy a stock?

so that it goes up

and we finally sell it at a higher price

and make profit.

--

what livermore wanted to say was

that till the falling stock actually stopped falling

consolidated

and started to climb again

there was little chance that it wouldn't fall more!

and hence, no point buying it.

and when it finally showed strength

and started to move up

it would be a worth buying.

but by then

it wouldn't be at its cheapest price

besides being less comforting a buy

than when at its lowest!

--------

to quote livermore further

"stocks are never too high to buy or too low to sell."

and

"it is surprising

how many experienced traders there are

who look incredulous

when i tell them

that when i buy stocks for a rise

i like to pay top prices

and when i sell i must sell low or

not at all."