When it comes to buying ASX shares, most investors spend most of their time agonising about which ASX shares to choose. That's fair enough seeing as the ASX is home to hundreds of different, individual companies. But it's worth remembering the 'when' of buying a share can be just as consequential to the decision of 'which' ASX share to buy in the first place.
To illustrate, let's take a look at the CSL Limited (ASX: CSL) share price. CSL is often regarded as one of the best ASX 200 blue chip shares on the ASX, largely thanks to its stellar share price run over the past decade or so. But its more recent share price performance has been patchy.
If an investor had picked up CSL shares exactly a year ago, they would be looking at a gain of roughly 4%. But if that same investor had picked up shares on 8 March this year, the gain today would instead be more than 21%. The 'when' certainly matters.
Which, when or whatever?
So how do we get a good grip on the 'when' then? Switzer Daily's Michael Gable gave us some ideas in a recent article. Here's some of what he had to say:
Finding a good business is straightforward. What to buy is often not the problem. The main problem that I see is that investors find it hard to know when to buy…
We need to remember that something is only worth as much as what someone else is willing to pay for it… this means that you can do all the fundamental analysis in the world, but if the rest of the market isn't buying your stock, then the share price will not go up and your capital won't increase…
Once you have identified the business that you want to buy, it is important to pick it up at the right time. In an uptrend, a share price will swing higher and lower while all the time making upward progress. Many investors would like to buy it on the downswing, to get it cheaper…
All downtrends start with a down day. So it is best to look for a stock that has already had its downwards movement but is just starting to tick higher again.
Foolish takeaway
Of course, none of us can know when exactly is the best time to buy a share. And it's almost universal investing gospel that trying to time the market is a foolish idea (and not the good kind of Foolish). But Gable implies that it is not the worst thing to try and make an educated, data-driven guess on a good-quality company.
Remember, the investing legend Warren Buffett once said this: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
