What is the basic strategy behind "buy low, sell high"?

The concept of "buy low, sell high" centers around the goal of maximizing capital gains from investments in financial assets such as stocks. This strategy involves purchasing assets at a lower price with the expectation that their value will appreciate over time. When the price rises to a level above the initial purchase price, selling the asset results in a profit known as a capital gain.

The rationale behind this strategy lies in the fundamental principles of investing, where the objective is to increase the value of the investments held. By successfully identifying undervalued assets to buy and subsequently selling them when their prices have risen, an investor can realize significant financial rewards.

Other strategies, such as minimizing investment risks, creating a diversified portfolio, or achieving tax benefits, do not specifically focus on the fundamental mechanics of buying at a low price and selling at a high price. While these strategies may contribute to an overall sound investment plan, they do not directly align with the fundamental idea of generating profits through price appreciation in the context of the "buy low, sell high" strategy.