When is it best for you to invest?

One of the better on-line resources for investing in stocks is the Tycoon Report … I enjoy seeing it in my In-Box daily (BTW: also check out Tickerhound!).

I was interested to see an article that talked about the three best times to invest; here’s what they said:

To outperform the market, you have to master all the factors that determine when a company’s shares are most likely to rise, not just some of them. It is the combination of indicators, each reinforcing the other, that gives us the most accurate barometer of when and where to invest our money.

One of the topics I cover in detail in the CRISS course is timing or seasonality — the best months and years to make investments in specific markets. Many investors are unaware of facts like these:

  • In the 4-year presidential election cycle, market strength is greatest in the pre-election year: the NASDAQ has posted an average 32% gain since 1971 in pre-election years — and the Dow hasn’t had a losing pre-election year since 1939.
  • Since 1991, October has been the strongest month for the Dow and the S&P 500.
  • For the NASDAQ, the best months are October through January, during which the NASDAQ has averaged 12% four-month returns for over a decade.

 Now, I don’t usually try and time the market according to these (or any other) ‘best time to be in the market’ strategies, because the one time that I do will be THE TIME that the strategy doesn’t work 😉

You know, the papers will say “Market Shock – Dow Jones Plummets in Election Year … first time in over 100 Years … Investor Loses Shirt”.

But, if I am planning to invest AND I have found a stock at a great price in a company that I believe in …

… then it is sure nice to know that the stars are (supposedly) aligned in my favor; but, I’ll probably invest eben if they aren’t.

What are your favorite times to be in the market?

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9 thoughts on “When is it best for you to invest?

  1. Once I find a stock that I’m interested in, I typically will wait for the inevitable down times. In fact, I’ll often preliminarily screen stocks based on declines and try and find something oversold and still strong.

  2. @ Fiscal – A good Value Investor will do exactly what you suggest: 1. Identify a stock that is currently undervalued, 2. Time their purchase for a downswing … the risk, of course, is that there may be no downswing. The great book Rule # 1 Investing by Phil Town covers BOTH 1. and 2.

  3. AJC, what do think of gradient buying or buying a stock you believe will go up over a period of time, little by little until you are fully invested for that stock.
    to risk adverse or good practice?

  4. @ Joshua – In reality, the cycle of saving enough to buy into a position, then starting all over again, produces a kind of ‘averaging in”. But, if I had a lump sum, I would pick my stock / time and jump right in!

  5. Yes, I’m sure everyone here has the ability to value stocks more accurately than nearly any mutual fund manager who has an entire staff working for them to research and visit individual companies.

    It reminds me of those doctors and dentists who thought they were real estate tycoons before the Tax Reform Act of 1986.

    Best to stick to the areas you know (your core competencies) and work on building income there, not in stock market timing schemes.

  6. @ Bill – Thanks! Except, I don’t believe that the “mutual fund manager who has an entire staff working for them” stands any better chance …

  7. Good point AJC! And nothing wrong with eventually becoming a real estate tycoon even in this market were both real estate and financing for it is cheap. Especially if you have the level of income that allows for the acquisition of such real estate at a fairly rapid pace.

  8. Pingback: When is it best for you to invest? « How to Make 7 Million in 7 Years™

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