Buy Low - Sell High'' - This is one investment advice which is: Cliché, Misunderstood and Abused.

Abused. Because I can quote reams of data and statistic on how investors behave quite the opposite. Be it any asset class, be it any corner of the world, investors pump in money when the markets are high and push the panic button and exit when it tanks.

Abused. Because it says low - yet we wait for the 'lowest'. It says high - and we wait for the 'highest'. Timing the market is typical bad investor behaviour.

We met a prospective client last week, who was anxious and indecisive. ''I am too worried to take any decision right now. The markets are too volatile. Let's wait for markets to 'clear up' and then go ahead with things.''

But what does cleared up mean? Does it mean when people are less fearful? Does it mean when the news reports are positive? Does it mean when our friends are investing again? Keeping all of these signs in mind, do you think the market will move higher or lower when things clear up? Higher, of course. So, this decision to wait until things clear up sounds like a plan to sell low and buy high on purpose. It's a bad idea and an avoidable mistake.

So how do we stop the madness and avoid the same mistakes again next time the market goes down? (And it will go down again, I promise). Carl Richards has this simple 'Plan-Process-Product' checklist that could be the answer:

> Have a plan. I am not talking about one of those worthless, two-inch-thick books. I'm talking about the process of sitting down and deciding where you are today, where you want to be in the future and how you plan to get there.

> Decide if that plan means that you need to invest in stocks in the first place. It might not. Your plan could involve saving more, adjusting your goals or retiring later. The rate of return you need to achieve your goals is just one variable to consider.

> Find investments to populate the plan. This comes at the end of the process and is certainly not the first part. After all, you would never spend time deciding what car to drive on a trip until after you decided where you were going.

> Make changes only if the plan changes. Your plan, and not what the market is doing, should drive your behaviour.

(Authored by Amar Pandit, CFA, Founder of HappynessFactory.in) 

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