My foreign colleague out of nowhere asked me last week if “NOW” is the right time to invest?
Many seasoned investors will tell you there is no right time to invest. You should just “start” investing young, and the longer you are invested in the market, the better the investment. THIS IS TRUE!
Nonetheless, it is not fair to totally discount when to invest? For instance, is it better to invest before Covid End 2019 or now? The answer is straight forward.
Then there is another school of thought, that I am waiting for the stocks to fall further before buying? This is plain silly. You cannot predict the bottom!
Rewind a decade or more, let’s say end 2007 just before GFC, you invested in Dow at 14K and Nasdaq at 2.8K. Back then, you will probably go berserk after your investments! This is because Dow and Nasdaq will continue to fall until they bottom at 7K and 1.4 respectively.
However, if you have the stomach to withstand the crazy GFC crash and not sell your stock until today, Or better still, you kept accumulating regularly throughout 2008 and 2009, your investments will be multiple baggers today! Dow is 27K and Nasdaq is close to 11K as we speak.
Consider if your income is still stable and you are pretty sure that it will be unwavering for the foreseeable future, AND you have excess cash after keeping “rainy day e-expenses”, then you DEFINITELY SHOULD INVEST NOW.
Whether it is the best time to invest, I don’t know, but it is definitely a good and right time to invest.
You may hear many of your investing friends said…. “aiyah” I wish I can throw all my life time of savings into stocks Mid-March when Dow went below 20K, Nasdaq below 7K.
If you do that, that is plain stupid!
And you are gambling your entire fortune, without knowing what is going to happen, back then. Of course now, it is easy to say things like “I could have”, because things already happened now and you know stocks have since charted upwards since April. What if stocks continue to fall more than 50% after April?
From end March or early April this year, it is better to do nothing and wait for the dust to settle, or at least accumulates investment gradually and regularly. That is what I have been doing.
Yes, you did not catch the bottom but that is a more sensible thing to do.
Read what I wrote in April : What Should I Do in Stock Market Now?
Now that the worst has already take place for more than six months, I doubt we will re-test the Mar low. I said I doubt, but I cannot be certain as I do not have a crystal ball to see the future.
One thing for sure is at least the dust is more settled now than in Mar/Apr. And I am making sense from the general mindset of people, that, once a crisis take place unexpectedly, human nature is we will be more risk adverse and will tend to prepare better for the worst later. This means we are unlikely to be caugth by Covid second wave or the impact of the US general election, as investors have already taken that into account when they invest now. Also, the same type of crisis rarely takes place twice in a very short period of time.
Read what I wrote in August : Why Even a Covid-19 Second-Wave Will Not Crash the Stock Market by Much?
Therefore, I reckon that it is a good time to invest NOW!
The other questions are:
“How to invest”? and
“Where and What Stocks to Invest”?
I will address these questions in my subsequent post(s). Stay tuned….