When living in England and catching the train to and from work, I liked to get aboard early. That gave me time look for even better seats and ensured I didn't miss the train.
I use the same strategy for investing.
When a market is below key long-term trend lines and heads lower – a cheap market getting cheaper – I like to get aboard…even if I end up being early.
Taking a small position early in a market decline ensures I'm aboard for the eventual bottom, while leaving me cash in case larger bargains occur.
Patience is the key.
Inaction is easier after even a small action. With calmer emotions I enjoy searching for even better bargains.
I got on board today
I bought shares in an Australian listed company on 6th September 2011. It was my first buy since I bought M2 Telecommunications Group (ASX: MTU) on August 9. Wow! One company a month – I'm on a spending spree.
While M2 was stupidly priced at under $2.50, today's purchase is more fairly priced considering the environment and risks – but with my first price target a double, the possible reward is excellent compensation. Regular Motley Fool readers should be able to guess the company.
The best inflation-proof long-term asset class is shares. Part ownership of the best companies outperforms all other asset classes over the long term.
Buying shares close to generational lows stacks the odds in our favour.
Buying them even lower is better.
Read This Before The Next Market Crash is The Motley Fool's latest free special report. The title says it all. To get instant access to the report, simply click here now. You won't be disappointed.