It has been confirmed to me on an almost daily basis that investors are far more comfortable buying a stock that has fallen 10-20%, rather than one making new...

It has been confirmed to me on an almost daily basis that investors are far more comfortable buying a stock that has fallen 10-20%, rather than one making new all-time highs. Unfortunately, human psychology is often an enemy for investors who struggle at rule 1 of investing/trading: •Run your profits and cut your losses. Consider the below analysis of stocks in the US S&P500 over the last 100 years: -After the stock market hits a 52-week high, the compound annual gain over the next year is 9.6%. That is an impressive outperformance over the long-term simply holding return, which yields 5.6% a year. -Buying when stocks are within 6% of their 52-week lows leads to compound annual gain of 0%! The above history illustrates perfectly that investors are far better buying new highs than new lows. You might want to catch a falling knife and buy when stocks are at new lows, but if you do acknowledge, the stock selection must on average be far better than buying stocks that are rising. See full report including BEN,BPT,FMG,Iron Ore,SKI. (VIEW LINK)