When is the Right Time to Invest in Stock Market?

That is a million dollar question and the answer eludes most people. This question is probably as old as the stock market. Successful people like Warren Buffet make it sound so easy, yet most of you must be perplexed with the vagaries of the market. Is there a “right time” to invest or are there other factors like performance reports of companies, announcements regarding new acquisitions etc that matter? There are a lot of “experts” as they call themselves, who attempt predicting how the market will behave under particular circumstances. Going by percentages, they could be right half the time.

The truth is that it is very difficult to predict how exactly the stocks will move on a particular day. One way is to monitor the trends and go along with the flow. Announcements from companies about the launch of new products are known to have triggered extended rallies. The rallies get sustained if the products are unique and have global appeal and recognition. This will prompt fresh investors which in turn will push up the demand and the price. The prices will fall drastically if the same company were to announce that it is going to phase out a particular product or cut its expenditure on R & D.

Many consultants and companies publish statistics with the percentage of profit they made out of a recent kill. However, what they fail to mention are the losses they incurred in other scrips. Most seasoned speculators do not put all their eggs in one basket, they spread out the risk and invest in a bundle of stocks that they favor most. Even if some of them tend to nosedive, there will be others that shoot up to compensate. They normally talk only about the profits they have made and not the losses. 

Almost all stock market gurus have their own strategies that they follow religiously. Most of them spend a lot of time and energy in technical analysis and extensive research on a set of scrips that they have selected. Based on the results of the analysis and research they will be able to predict the upward or downward movement of stocks. Please note that there is money to be made both ways. You can buy into a stock that is predicted to fall (what bears normally do) or into a stock that is expected to rally upwards (the forte of bulls).

Warren Buffet has explained a simple strategy that is based on logic, and the only thing required is a lot of patience. Select a few blue-chip companies and watch the price movements closely. You are not required to detect any complex patterns or trends, just get to know the average price that the stock comes back to after bouts of fluctuation. Buy when the price goes down below normal levels (due to a variety of reasons) and hold. You may have to wait weeks or even months, however, ultimately the prices will bounce back and rally upwards, and that is the time to sell.

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