Don't try to catch a falling knife

Cliché’s are a wonderful memory device. If you knew and utilised scores of clichés throughout your life I am sure you would be good at lots things. Original thought is often not required, just RTFM (Read The Forking Manual).

Don't try to catch a falling knife

If a share is falling let it fall. Many shares often have a 100% low to high in a year, so don’t try to catch that falling share, look to buy on a rebound.

Take Telstra for example. It has fallen from over 5.25 to 4.26, but is that cheap, will the market take Telstra even lower. If only investing a little then because of commission you will only have one shot at the price so it is more important to wait for signs of support; like good levels of buying. You dno’t want to plunge in too early with your precious investment capital to cut yourself on that investing knife. Mixing my metaphor, let the knife hit the floor and then pick some shares up.

If you have more capital then you should try to buy in three lots, ie split your money over three buys, to average in a price. This reduces stress on trades, as if you guess to early first up, you are only 1/3 in the trade, if share quickly rebounds you have some money in and can add the rest and so on.