Retail ASX investors are always told to be in it for the long term.
Trading is gambling, while 'buy and hold' is true investing, the experts say.
You see, a stock market will have a bad day, month or even year. But eventually, it moves in an upwards direction.
So if you can ignore the volatility and stay fully invested for the long-run, then the chances are your wealth will have grown at the end of it.
Sensible advice.
The other bits of strategy we hear are:
Also eminently sensible.
If you sell when shares have plunged, all you're doing is turn a paper loss into an actual loss — without any chance of recovery.
And if you can pluck up enough courage, buying shares during corrections is like picking up a pair of pants at the Boxing Day sales.
They're still the same trousers, just cheaper.
But hang on a minute
This is all good and well, but how can you possibly practise all 3 of the strategies in the 'buy and hold' game?
If you're fully invested, you have no spare cash to invest. And you don't sell during a correction, so you still don't have any cash.
So how do you buy up those bargains without any money?
The Motley Fool asked some experts as to how a retail investor can possibly carry out all 3 pieces of advice.
You really can't do all 3
"Those are all worthy sentiments. And I think they are all good advice," said The Motley Fool Australia chief investment officer Scott Phillips.
"But yes, they're incompatible! But they're incompatible in the same way that no 2 investors are the same or find themselves in the same circumstances."
Phillips revealed that he preferred to stay fully invested, and therefore sacrifice the "buy bargains" mantra.
"I rarely have 'extra' cash when a crash comes. But I think that's the right approach, given that the market tends to go up more than it goes down and, over time, continues to set new high watermarks, one after the other."
Shaw and Partners senior investment adviser Adam Dawes takes the opposite approach.
"We always like to keep at least 10% of clients' money in the bank for opportunities — or using a broker expression 'Keeping your powder dry'."
Not being invested will cost you
To Phillips, to have money lying around doing nothing is a wasted opportunity.
"To not be invested would be to bet against the tide of history, which has continued to push markets higher," he told The Motley Fool.
"And if you're waiting to buy on a 'dip', you might end up missing a 20% gain while you wait for a 5%, 10% or 15% 'dip' to come along!"
And it's not like anyone knows whether they're at the top, bottom or otherwise anyway.
"It's hard enough to know what mood the market is in today, let alone tomorrow, or next week," said Phillips.
"I'm not going to say it's a waste of time trying to guess but… Ah, bugger it. I'll just say it: It's a waste of time."
Beware of the bargains during market corrections
Both Dawes and Phillips agreed on one thing though.
If you're going to buy up bargains during a market correction, you better make sure the business is sound.
"My mantra in the recovery phase or bottom of the market is 'Don't be a hero'," Dawes told The Motley Fool.
"Buy good quality stocks and put them in the bottom drawer. Example: Commonwealth Bank of Australia (ASX: CBA) at $55, BHP Group Ltd (ASX: BHP) at $25. You need to look past the valley and just buy good quality business that will last the test of time."
As for selling during a crash, aside from the obvious loss of money, Dawes also pointed out a devastating psychological effect.
"If you sell, then most clients don't get back in as they are paralysed with fear as markets continue to recover," he said.
"It is not wise to sell as markets always come back. March 2020 it came back within 6 months and GFC took a little longer."
