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When you participate in the stock market, timing your purchases and sales is important. You want to buy low, hold and sell high. Or you want to sell high and buy low or you want to buy a dividend paying share at a low price.
In order to buy or sell at the price you want, some form of market timing is inevitable. But how do we do time the market? You Cannot Time the Market (All the Time)
One of the key lessons I’ve learnt from investing (and the occasional gambling) on the stock market is that you cannot time the market all the time. As a retail investor, one is limited in being able to call the troughs of the bear market and the peaks of a bull market. Hence you cannot hit the highest of the high or lowest of the low because these change and evolve so long as the market is still running and the market can go on long after we have moved on from this world.
You still need to observe the market and try a limited form of timing, i.e. buying blue chips when the market has corrected sharply (e.g. Dow plunging 300+ points) if you have a long-term and more positive view about the business prospects of the underlying fundamentals of the company. This doesn’t guarantee that you will buy low but at least you’re not buying at an over-valued price.
The value versus price of a share requires judgement and our interpretation of the facts, information and market news surrounding the company. Thus, my own rule of thumb is to consider nibbling a few lots of the dividend paying blue-chips that I am eyeing during such periods of overall market correction. I also buy within my means and never commit more than 75% of my portfolio into equities (I’m currently at 17% equities and 83% cash). Read more...[caption id="attachment_2109" align="alignright" width="150" caption="Photo by FABIOLA MEDEIRO"][/caption]
When you participate in the stock market, timing your purchases and sales is important. You want to buy low, hold and sell high. Or you want to sell high and buy low or you want to buy a dividend paying share at a low price.
In order to buy or sell at the price you want, some form of market timing is inevitable. But how do we do time the market? You Cannot Time the Market (All the Time)
One of the key lessons I’ve learnt from investing (and the occasional gambling) on the stock market is that you cannot time the market all the time. As a retail investor, one is limited in being able to call the troughs of the bear market and the peaks of a bull market. Hence you cannot hit the highest of the high or lowest of the low because these change and evolve so long as the market is still running and the market can go on long after we have moved on from this world.
You still need to observe the market and try a limited form of timing, i.e. buying blue chips when the market has corrected sharply (e.g. Dow plunging 300+ points) if you have a long-term and more positive view about the business prospects of the underlying fundamentals of the company. This doesn’t guarantee that you will buy low but at least you’re not buying at an over-valued price.
The value versus price of a share requires judgement and our interpretation of the facts, information and market news surrounding the company. Thus, my own rule of thumb is to consider nibbling a few lots of the dividend paying blue-chips that I am eyeing during such periods of overall market correction. I also buy within my means and never commit more than 75% of my portfolio into equities (I’m currently at 17% equities and 83% cash). Read more...
[/caption]
When you participate in the stock market, timing your purchases and sales is important. You want to buy low, hold and sell high. Or you want to sell high and buy low or you want to buy a dividend paying share at a low price.
In order to buy or sell at the price you want, some form of market timing is inevitable. But how do we do time the market? You Cannot Time the Market (All the Time)
One of the key lessons I’ve learnt from investing (and the occasional gambling) on the stock market is that you cannot time the market all the time. As a retail investor, one is limited in being able to call the troughs of the bear market and the peaks of a bull market. Hence you cannot hit the highest of the high or lowest of the low because these change and evolve so long as the market is still running and the market can go on long after we have moved on from this world.
You still need to observe the market and try a limited form of timing, i.e. buying blue chips when the market has corrected sharply (e.g. Dow plunging 300+ points) if you have a long-term and more positive view about the business prospects of the underlying fundamentals of the company. This doesn’t guarantee that you will buy low but at least you’re not buying at an over-valued price.
The value versus price of a share requires judgement and our interpretation of the facts, information and market news surrounding the company. Thus, my own rule of thumb is to consider nibbling a few lots of the dividend paying blue-chips that I am eyeing during such periods of overall market correction. I also buy within my means and never commit more than 75% of my portfolio into equities (I’m currently at 17% equities and 83% cash). Read more...
Hi Derek
Thanks once again for featuring my post.
Be well and prosper.