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The stock market has been very volatile for the past month. During these times, there was a record number of withdrawals from mutual funds as people get scared of being invested in equities. We know this is normal because this is just emotions playing games on us. We know that when everyone is scared about investing in stocks, it means that everyone who will sell stocks have already sold, a sign of a bottom. We also know that when everyone is talking about the stock market never going down, it means that a crash is likely.

During the last month, I have increased my exposure to stocks. Other than continuing to contribute to my 401k, I have moved 30% of my cash holdings into the stock market. Although the stocks I purchased with additional money increased in value, I’m not prepared to say that this strategy has worked because my goal is not for short term gain. I believe that if I always buy stocks when everyone is scared and sell stocks when everyone is complacent, I will be able to practice “buy low, sell high”.

As my goal is financial freedom in the long run, I feel that I’m on the right track with this approach. Sure, I might be termed a “knife catcher” from time to time, but what I know is that I will never be the person who buys at the absolute top. This not only allows me to stay optimistic about my investing future and also keep me invested when times are bad, it will also instill a much needed discipline in me.

I understand that this may or may not work for you, and is way over simplified. I’m also not saying that you have to follow my approach. I just want to share with you what’s been working for me, as I hope that every reader of this will eventually be financially free.