Tomorrow looks pretty good, too. People often ask me whether now is a good time to buy shares. They assume that, as an investment journalist, I will have some insight into the matter. And in the early years, I tried to deliver a sensible answer. I would throw out some recent trade numbers, highlight a couple of trends and counter trends, toss in a brace of analyst quotes, then dazzle them with my sage conclusion. Maybe. The truth is, I didn’t know. And nothing has changed. I still don’t know. Maybe, baby So is now a good to time to…
Tomorrow looks pretty good, too.
People often ask me whether now is a good time to buy shares. They assume that, as an investment journalist, I will have some insight into the matter.
And in the early years, I tried to deliver a sensible answer. I would throw out some recent trade numbers, highlight a couple of trends and counter trends, toss in a brace of analyst quotes, then dazzle them with my sage conclusion. Maybe.
The truth is, I didn’t know. And nothing has changed. I still don’t know.
So is now a good to time to buy shares? Well, US GDP figures have just surprised on the upside, but German manufacturing is shrinking. Emerging markets face a hard landing, but China and Brazil are lining up lavish stimulus packages. Some analysts claim stocks have further scope for growth, others predict a perfect storm in 2013.
So should you buy? Maybe.
From time to time, there will be a really great moment to buy shares. It may only happen a few times in your investment life. And when it does, you will almost certainly miss it.
The perfect moment that springs to mind is March 2009, in the dark days of the credit crunch, when the FTSE 100 (UKX) brushed 3,500.
Some lucky people did buy shares, and fortunes were made. You probably bought a few bits and pieces yourself. I did — I just wish I’d been brave enough to buy more.
Shocked and awed
It is easy to forget how shell-shocked everybody was at the time. Buying shares seemed a crazy thing to do, far better to spend your money on tinned food, bottled water and ammo.
When markets are down and shares are cheap, most investors are too paralysed with fear to take advantage. The perfect moment passes.
Similarly, when markets are flying, they are giddy with greed, and get their timing wrong again. It takes a strong-minded investor to buck either trend.
Delaying financial decisions in the hope that events will move your way is dangerous. Waiting for that perfect moment, or at least a marginally better moment, while understandable, can horribly backfire. Procrastination is the thief of wealth.
Good, bad, whatever
You can apply that argument to buying shares. Should you buy now? Maybe. There are arguments both ways, and I’ve listed a fraction of them above.
If you keep waiting for the perfect moment, you will never buy any shares. Even if that moment arrives, as it did in March 2009, it will look like the worst possible time to buy shares, and you’ll fluff it.
You have to accept that sometimes you will buy shares on a good day, and sometimes you will buy on a bad day. The real danger is failing to buy at all.
If you knew for sure that markets will fall and those shares will get cheaper, then you should wait. But as recent years have confirmed, nobody knows anything.
Nobody knows whether now is a good or bad time to buy the stocks. But in my experience, there is never a bad time to bank a 5% dividend.
Some people spend their investment lives looking for the perfect time to buy shares. They should give it up. The perfect time to buy shares is today.
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The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
A version of this article, written by Harvey Jones, originally appeared on fool.co.uk