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So, when is the best time to start investing in stock market?
Is now the best time to invest in stocks?
Is Stock Market Crash Coming Soon?
We have been hearing that the stock market is going to crash soon.
In fact, we have been hearing it from experts almost every single year.
Thanks to Quoran John Roberson’s compilation of the news headlines:
2009 – Stock Market Crash Dead Ahead Say Faber, Rogers, Dent and Celente
2010 – Jim Rogers predicts a new recession in 2012
2011 – Jim Rogers: “100% Chance” of Another Financial Crisis That Will Be Worse Than 2008
2012 – Jim Rogers Warns : Financial Armageddon after U.S. election
2013 – ‘Run for the Hills’ Now, I’m Doing It: Jim Rogers
2014 – Jim Rogers Warns: Albert Edwards Is Right “Sell Everything & Run For Your Lives”
2015 – Jim Rogers: US Stocks Headed for ‘Very Nasty’ Plunge
2016 – Jim Rogers Dire Warning : a $68 Trillion Biblical Crash Dead Ahead
2017 – JIM ROGERS: The worst crash in our lifetime is coming
How do you feel when you hear bearish news like this?
Does it make you want to wait until the stock market has actually crashed? Because you are scared that you would be buying at the high and lose all your money.
But, the reality is that if you have followed the expert’s advice and stayed out of the stock market for the past few years, you would have missed on the years long market rally.
Is stock market going to crash soon?
The truth is no one really knows.
So, trying to predict the next market crash would be a waste of time.
Your time is much better spent finding good companies that are selling at a good price.
What Is The Best Time To Invest In Stock Market
Here’s the short answer.
The best time is when you find a good business at a good price.
So, you need to make sure that you have cash on hand to make the purchase when it happens.
Next, let’s look at how you can find a good business to buy.
But first, what business is considered a good business?
Here are some factors to consider:
- Financial performance (e.g. stable and strong past earnings)
- Financial position(e.g. consistent positive cash flow & below industry average debt to equity ratio)
- Future earnings (e.g. future earnings expected to remain strong and stable)
Once you have identified a good business that you want to invest in, you should add it to your stock watch list.
Now, you know what business to buy.
Then, what is a good price for you to buy?
How do you determine your target buy price?
To arrive at your target buy price, you need to value the business first.
Next, you apply a margin of safety to the estimated fair value of the business to get your target buy price.
When the market price reaches your target buy price, it’s time to get in the stock market.
There’s NO best Price.
When good opportunity presents itself, there are other smart investors waiting to take this opportunity as well.
So, you might not be able to get the lowest price because other investors push up the price fast.
Warren Buffeet once admitted that he made a mistake in Walmart.
He initially wanted to wait for the price to come down a bit further before buying, but its price never fell back down again.
Later on, he did buy it at a higher price.
But, this lesson cost him millions of dollars in potential profits.
Waiting for the best price could cost you a lot of money, too.
If the stock price kept going up, you could become more and more reluctant to invest because it has moved further away from your “BEST” price.
In the end, you might miss all the potential gains just because you ONLY wanted to buy at the “BEST” price.
There’s no best price.
There’s only good price at the right time.
If the market price is within a reasonable range of your target price, you should make the move.
Don’t focus on the small price difference at the time of investing.
What you are after is the potential gain that this stock investment can bring in the future.
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