This article was updated on March 14, 2018
Is now the time to buy stocks
Most individuals obsess about what stocks to buy; they compile lists of stock they hope to get into but never focus on the optimum time to purchase them. One could buy a top-rated company and lose money simply because one purchased the stock at the wrong time. Nothing goes up forever; it’s essential you understand this concept for you could end up losing a lot of money. Take a look at the IBM; it was a great buy from 2009 to roughly March 2013. If you put new money into that stock after March of 2013, you would have essentially lost money
Therefore while building a list of great stocks is important it’s not the most important criteria; knowing when to buy a stock is more important. Understanding market sentiment via Mass psychology plays a key role in determining when you should buy and when you should sell. One of the best times to buy stocks is after a stock market crash.
The masses are panicking and dumping the baby with the bathwater. Coincidentally Warren Buffet sold most of his position in IBM in early 2018, time will tell if this was a wise move, but the charts are indicating that as of March 2018, that IBM could be putting in a long-term bottom formation, which means it could soon make for a good long-term investment.
The main point being made here is that it’s not the quality of the stock that matters the most but the timing of when you buy or sell that matters even more. If you jump into the market at the right time, you could still make a boatload of money by buying mediocre stocks, but if you jump in at the wrong time you could lose a boat of money
One of the best time to buy stocks is during a Market Crash
Is now the time to buy stocks? The answer depends on your investment outlook. If you are investing for the long term, then all strong pullbacks and so-called crashed have to be viewed through a bullish lens.
The above point is clearly demonstrated in the image below. If you had purchased any strong stock such as AAPL, AMZN, NFLX, NTES, GOOG, FB, ABMD, etc when the market pulled back strongly, you would have fared very well. Even if you purchased mediocre companies you would have faired well a few months after the markets crashed; a few years later you would be sitting on massive gains. Create a “Best Stocks to buy” list so that in the event the market pulls back you are ready to jump in.
The main uptrend line is indicated by the solid blue line (last line in the chart above), but we put in a dotted navy blue line for those who would insist that the uptrend line could be drawn through secondary point. Whichever uptrend line you choose, you can see that this point holds true, the greater the deviation, the better the buying opportunity. Look at the chart above; who won the from 1990-2016, the bears or the bulls?. This chart is a clear illustration that the Doctors of Doom only make their money by selling the masses crap they would never dream of using.
The purple dotted line (4th line to the top of the chart) provides a guideline as to future market price action. However, to be conservative, we drew in two lines. The navy blue one (3rd one) indicates that the Dow should easily trade to the 19,500 plus ranges in the not too distant future as long as the trend is up. The 4th line (purple dotted line) suggests that the Dow could trade past 25,000 before this bull market is over.
New notes March 14, 2018
Since we published this article over 2 years ago, the Dow has hit all the suggested targets and is now consolidating and building steam to trend higher. Therefore after this consolidation is over, there is a good chance that the Dow could go on to put in a series of all-time new highs. And at this stage of the game, the improbable could become probable; Dow 30K might not appear to be a pie in the sky target.
When the blood is freely flowing on the streets; get out your “stocks to buy” list
When the markets are crashing or pulling back strongly, negative sentiment is running high and the crowd in their haste to get out; they dump the baby with the bathwater. In other words, they sell quality stocks for pennies on the dollar. As an Astute investor instead of panicking you realize that this is a once in a lifetime opportunity and you jump in. Now it’s not easy to do this for in the heat of the moment it feels like the market could continue crashing forever. That’s why we created tools to help us identify key market turning points; the most important of which is the “Trend Indicator”.
Never panic during a Stock Market Crash
So what should you do? For starters, go back in time and reflect on how much you wished you had a bought more of a certain stock before the price took off. Now you have that chance, so instead of panicking focus on the list of strong stocks you have and always wanted to buy at a lower price. Technical analysis and mass psychology provide you with a means of buying close to market bottoms and selling close to the top. So instead of panicking get out your Stocks to buy now list and start buying the companies you wanted to buy before at a huge discount.
The Trend Indicator has never missed A Major Stock Market Turning point
The trend indicator removes the guess from trading. It identifies the trend in advance, leaving us with ample time to build the best list of stocks to buy. We can then narrow our list from say 50 potential candidates to the best 10 or 20 candidates to buy. Additionally, we can focus on identifying the optimal entry point for each stock instead of worrying about when the market will put in a bottom. This strategy has worked marvellously for us for 15 years and counting.
Please don’t confuse bottoming or topping action with timing the exact top or bottom; that’s an endeavour best reserved for fools. We strive to get into the markets when they giving signs of putting in a bottom; one of the measures we use it gauging the level of fear and anxiety in the market. To do this we use our proprietary sentiment tools gauge to determine optimal entry points. We further refine the process with the use of custom Technical indicators. However as we stated before, our main tool Is the trend indicator.