Swifties Get It

I still laugh at some of the things I learned when I first started down the investing rabbit hole.

One of the first phrases you’ll run into is “buy low, sell high.”

It sounds great on paper, but in practice the market doesn’t always work that way.

Take the S&P 500.

The very thing Warren Buffett tells most people to allocate to because it’s so hard to outperform.

It doesn’t buy lows and sell highs. 

It systematically adds exposure to strength and cuts exposure to weakness.

That’s buying high and selling low, the exact opposite of the cliché.

Another misunderstanding comes from RSI.

Because it oscillates between 0 and 100, many treat it like a strict mean-reversion tool: overbought means bearish, oversold means bullish.

The problem is mean-reversion logic doesn’t work well on assets in strong trends.

This is what separates observations (a commodity) from analysis (a skill).

We must understand the context of price relative to RSI.

Take Gold.

$GLD - Gold is "Overbought" 

When Gold broke out of its base, it entered a strong uptrend. 

And in strong uptrends, RSI gets overbought and stays there. 

That’s not a warning sign, that’s a feature.

Think of it like Taylor Swift tickets. They don’t sell out because demand is about to collapse.

They sell out because demand is overwhelming. The same is true for stocks in strong uptrends.

Overbought means buyers are tripping over each other to get in.

Markets are full of sayings that sound smart but don’t hold up under scrutiny. “Buy low, sell high.” “Overbought is bearish.” 

Easy to repeat, dangerous to misunderstand.

The reality? Getting "overbought" is exactly what strong trends are supposed to do. 

Anyways, that’s my two cents.