Warren’s Wisdom: Why You Should Buy in the Troughs (When Everyone Else is Away)

It's one of the most famous pieces of advice in investing, delivered by the Oracle of Omaha himself, Warren Buffett: "Be fearful when others are greedy, and greedy when others are fearful."

What does this really mean for your day-to-day investing? It means the best time to buy often feels the most uncomfortable. It means buying in the troughs—those dips in the stock price when everyone else is panicking, selling, or simply looking away.

The Power of Buying Small and Often

Forget the idea of trying to time the absolute bottom of the market. That's a fool's game. A much smarter, safer strategy is to buy only a few shares of a great stock at a time.

If that stock then declines, but you still believe it's a fundamentally good company with a solid future, you should buy more of it, even if the price is now below what you first paid.

This approach is one of the oldest and most reliable methods in the game: Dollar-Cost Averaging (DCA).

How DCA Works:

Instead of investing a lump sum once, you invest a fixed amount of money at regular intervals. When the price is high, your fixed amount buys fewer shares. When the price is low (in the "trough"), your fixed amount buys more shares. Over time, this lowers your average cost per share, making you less vulnerable to buying at market peaks.

Your Best Buy Might Be a Stock You Already Own

Before you go hunting for a brand-new idea, take a good look at your current holdings. Sometimes, the best buy is a stock you already own.

1. Look at the Charts: Pull up the chart for a stock in your portfolio that has recently dipped.

2. Reaffirm Your Thesis: Ask yourself, "Has anything fundamentally changed about this company's future since I first bought it?"

3. Buy the Dip: If the company's prospects are still strong, that dip is your invitation to buy in the troughs between its higher prices. You are effectively getting more of a great company at a discounted price!

This isn't just about reducing your average cost; it's about capitalizing on the market's irrational fear. When a strong stock goes down, it's often due to temporary bad news, broader market fear, or a technical correction—not permanent damage to the business.

By being "greedy" (i.e., calmly buying) when others are "fearful" (selling or sitting on the sidelines), you position yourself for maximum reward when the inevitable recovery comes. Stay patient, stay disciplined, and use those troughs to build your wealth.