If you study the Investment Quadrant, you realise that selecting a good company is only part of the equation. The final step is to buy a stock only when it’s trading at a low valuation. Remember, a good company can still be a bad investment if you overpay for it. So knowing when to buy a stock cheap is just as important as picking the right company if you want to earn good returns in the stock market in the long run.

So when are the best times to buy stocks at a discount? Here are three scenarios I personally look out for when it comes to finding undervalued stocks.

1. Buy when the index dips

When the index dips more than 20%, many times, it signals an opportunity to invest. This is because when the market falls as a whole, a lot of good companies get taken down …