When is the best time to purchase stocks?

Question

What are some things to consider when looking into buying stocks?

Answer 1

There are at least three different approaches as to when to buy stocks. 1. the technical approach. With this approach, the theory is that you should buy stocks when the technical indicators are flashing a buy signal. There are maybe 20-30 different technical indicators that can be used, maybe more. It does get confusing. But the basics are to buy when the stock is rising in value. 2. Fundamental approach. With this approach a person buy a company that is fundamentally strong and apparently selling at a discount to cash flow. 3. This is perhaps the most interesting of the three approaches. The contrarian approach. One buys the stocks that no one else wants. The ones that are currently out of favor. Interestingly enough mutual funds that use this approach generally turn in very good returns.

There are other subsets of these basic 3. But I believe that best sums it up. I favor a combination of 1 and 2. I am too gutless to partake of 3.

Answer 2

Part of the question is why are you buying a stock?

There are people who put money into stocks thinking that the price will magically spiral upwards and a little bit of money is sort of like winning the lottery. It doesn't (usually) happen that way.

There are people who hear that this company or that is doing something special or whatever they are doing, they do it very well. If you are thinking you want to be part of that, then you buy stock in the company.

There are even people who make money when a company's stock goes down. Some folks made a boatload of money on Ford and General Motors over the last couple years. It is called selling short and the broker simply borrows (for a fee) from the stocks on their books from their customers, sells it, and then you buy it back later. If the price is lower, you just paid for less than you sold it at, and get to keep the difference (of course the broker wants their cut).

The old "buy low and sell high" advice is sort of an inside joke. True, unless you are selling short, you better sell a stock for more than you paid for it or you will have lost money, but just because, say, the stock is at the low for the year, it can still go lower. Just because the stock is at the high for the year, it can still go higher. The market sets the price and the market is a bunch of folks who say a company is worth more than the price shows (they are bullish) or less (they are bearish), so if they think it is too cheap they buy--to them they are 'buying low'--and if the price has gone up to more than they think it deserves, they sell--to them they are 'selling high'. Still, most individuals often will discover that they are wrong--their numbers and ideas may make sense, but the concensus of trades says 'not today'.

When is the best time to purchase? When you are comfortable with the price and prospects of the company.

Answer 3

Remember: all stocks you buy are stocks someone else is interested in selling. There is no particular time of day, or month, or year that is better than another. The best time to buy is when the stock is down because of bad news that is not permanent. An example would be the housing industry - the news is full of bad housing stories - hence the stocks are cheap. You may not buy at the bottom but if you can wait a year or two these stocks will recover - in my opinion.

Answer 4

Good question and if you can figure that out you'll be rich. I had a finance professor with ah PhD who used to be a stock broker but will not even spend one penny now on stocks. He told me that because the B&M companies are becoming more and more rare that there is no real assets in many companies anymore; i.e. the dot.coms. Be carefull about purchasing high risk stocks that are not backed by physical assets.

Of course the best time to purchase is on the upswing in price and sell before the downswing.

Answer 5

Looks for cycles in the stock. Generally stocks go down in May though September and pick up in October through April. The range can be wider or narrower. Historically the average stock is lowest in October and highest in January.

Answer 6

My Grandpa was very smart, but only so, so as far as stocks are concerned. He always told me to buy low and sell high. By golly, he was ever so right. So I reveal my grandpas' secret: buy a stock just before it doubles and sell a stock (short) just before it drops. Works for me.

Answer 7

The type of stock it is. I happen to sway towards Pharmaceutical and Computer Technology. As the old saying goes, "Buy low sell high".

Answer 8

In the morning...pre sales....or right before the end of the day bell closing...