When is the right time to buy a share?

By Jason Fittler

Is it time in the market or timing the market, which yields the best results?

Here is the first tip to new or old investors about buying shares. If someone has an absolute approach to investing, they focus on one method and forsake the rest you can be sure you are getting bad advice.

It could be lack of experience. The need to feel like the expert. Or you are dealing with a sales person and not a professional adviser.

When it come to investing in shares there is no one right way.

A customer focused investment adviser knows that the right approach for now depends on 1. What is happening right now on the market, 2. The economy and, 3. Globally.

They will take into account all these factors and look for the best opportunity right now.

When we look at which is right in regards to time in the market or timing of the market the answer is both.

You need to be in any investment for the long-term. To make remarkable returns however the point you enter the market will have an effect on the end result of the investment.

This is why the core of a successful investor is PATIENTS. 

Never be in a rush to lose your money.

So what should you be looking for when looking to invest in shares?

1. Ignore all media. They sell advertising space not advice. If it is on the television, radio or in print it is about selling advertising. Rest assure by the time a good tip hits the media everyone in the know has already acted so you are too late.

2. Economy – always understand where the economy is at and where it is heading. A basic understanding of the driving forces in the economy will save you lots of failed investments. You need to understand which sectors of the economy are doing well and which are performing poorly. By understanding this you will be able to see which sectors of the market are riding the high, which ones are at their lows. This help you to pick which stocks are likely to ride the next highs and which sectors are about to pull back.

3. Companies – you must always do your own research. Sure take a look at all the research available to you online but also make sure you take the time to review different opinions. Do not just rely on what the research is telling you; look at the financials. Many a lie can be uncovered by crunching the numbers. You want to make sure that you understand the whole story, the good and the bad. Especially the bad, poor investors never focus enough on the downside, they are too busy spending the money the have not earned yet.

4. Technical Data – the share market is not a logical place, do not assume it is. The efficient market is a myth. Not all information is available to all people at the same time. Technical analysis is one way to see how a share is trading and the direction it might take in the short term. This can help with the timing.

If you apply all the above when you start to think about investing in a particular share or company you will have a better than average chance of getting it right.

This is when time in the market comes into play.

Now you have a good investment continue to hold regardless of the share price. Hold until something about why you purchased the investment changes.

Time in the market yields the best results.