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The reason I am so rich is because......

If there is one statement and one philosophy which sums up the UK investment market it is the strategy of Lord Rothschild who famously commented that "The reason why I am so rich he is because I always sold too early". So what exactly does this mean and does it work in practice?

The philosophy behind Lord Rothschild's investment strategy is the fact that each and every sector, each and every stock market and each and every investment market in the world has boom times and bust times. As we have seen on many occasions over the years, various stocks in various sectors will become fashionable and be chased by investors to levels which ultimately are too high and bring in profit takers.

The dot-com bubble of the late 1990s was the most recent example of such a fashion led investment period which saw investors throwing millions upon millions of pounds into businesses which had made no profits, were unlikely to do so for some time and were ultimately based upon hope.

While many people learnt their lesson, the hard way, when the dot-com bubble burst, it will only be a matter of time before similar scenarios occur. Investing in a share, sector or stock market at the lowest level possible is a unique skill and while selling before the top of the market sounds easy in principle, it can for many people be difficult in practice. Fear and greed are two emotions which often come into play.

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