Why not today.
There is no best time or worst time to invest, not in
the conventional sense. You have to determine that for yourself. If you
like buying discounted, then maybe the best time is
the worst time...
Timing the market.
When is a good time, when is a bad, when is
the safest time?
The safest way to play stocks and funds is to invest in the fundamentals.
The fundamentals of a company, basically, are how the company is doing with profits
and margins. What they are selling-- services/ product-- the demand,
cash flow, return on assets, and
how it's doing over time, shares and business performance.
Forecasting the market.
Great subject. You cannot predict the stock market 100 percent of the time,
unless you say it's going up, sideways, and down, then, of course, you'll
It stands to reason then, that you can, however, forecast the market
with less than 100
You'll find market predictions to be very
Even Market-Barometer models
cannot foresee all events.
Wars happen, assassinations happen, skirmishes, storms, natural
disasters, they all can play havoc with the stock market. Just look at what
happened to stocks during the credit crisis when banks went under.
So a forecast can only forecast the fundamentals of a
market, sector, stock, fund.
So what to do.
Unless you can stay in front of the PC all day and not
miss a thing, you'll find it difficult, at best, to try and trade the
Trading, by our definition, is buying and selling
multiple times in a short-term pattern. The idea is to make profits quickly.
Investing, by our definition, is buying and selling
over longer periods of time. The idea is to make profits over the long term.
The "buy and hold" process.
Of course you must find the right company or fund.
Once you have, then you might buy an initial position.
Let's look at the process with the following examples.
In these examples commissions and interest have been left out.
Let's say you have done your research and you have
found the right company, this example also works for funds.
Let's say you found a company named ABC. You have
looked over the stock or the prospects, if its a fund, and you have
determined that you want to buy it.
Let's say you have 10,000 Dollars for this stock or
fund (a goal).
Let's say you buy $2,000 worth of the stock that is
selling for $20 per share. You just bought 100 shares.
You have spent $2,000, have $8,000 left in cash for
this goal, and you have 100 shares of ABC.
Lets say over time the stock goes down to $16 a share.
You decide to buy another $2,000 worth of ABC. Why?
Because if this is a good solid company or a fund, and
in your review you have no reason to suspect anything other than it's a great
stock or fund, you could better your position by buying more.
A good way to make money is to dollar-cost-average as
the stock goes down in price, you can better your cost basis by buying more
shares as the price gets cheaper.
When you turn around a year later, or when you have
reached your goal, you stand a better chance of making more money by dollar-cost-averaging.
OK, lets back up a little.
What happens when you buy the initial position in ABC
and ABC goes up in price.
You can leave it alone, let it go up, put your money
on another goal or...
You can still dollar cost average even while the stock
or fund is going up. All you are doing is moving your cost basis up.
The point to all this is to find what works for you.
Make a buy/ sell plan. You don't have to make big
bucks overnight. Take the long-term approach, with a plan.
There are plenty of good reputable websites on the
internet, like the ones mentioned above, that have in-depth lessons and
articles that you can study.
Whatever you do, take the following with you:
Don't worry over the ups
and downs of the market.
Make an investment strategy
(plan) and follow it.
Diversify, diversify, diversify...
Warren Buffett didn't get rich by emotional investing. He
made a plan and he followed it.
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