A broad
spectrum of experts have consensus on the fact that its very tough to time
the market. They say that instead of trying to time the market to buy or
sell, always try to stay longer in the market. This basically means, buy
good companies shares, come back and see after years. You are very likely to
have appreciated your investment substantially.
On a given day,
a companies share price can go down 5 % and go up 5%. Even though such
movements may not be common, they are not rare. Those who were in the
market know this. If you were to buy the said share, how can you possibly
know when it would get to the lowest point. You would invariably not catch
such a best time to buy it and also to sell it (at its peak price). This is the case with not only you
as a beginner but also any
expert.
No one knows
exactly when a share price will go up or down. Through the background
knowledge you have into the market and the factors which affect the market, sometimes, you may be able to make a fairly accurate guess.
However the fact remains it is only a guess work and it does not have to
be correct.
Easier thing to
do is not to look too much into when a price is low and instead make that
purchase at a fairly good price according to your assumptions. Base your
assumptions on advise
appearing on reliable sources, and then wait for longer so that instead of
trying to time the market, you are staying invested longer to make a good
profit.
Next:
Risks and need for Diversification
