Is It time to start buying stocks ?
There is no right or wrong time to buy stocks. However, general rule of thumb is if you realize the market or a segment (large, mid, small, auto, pharma etc.,) are falling, then chances are that you may get your favorite stocks at a discount, due to herd mentality of market participants, especially novice retail investors. Many of us might often have this question “Is it time to start buying stocks?”
From Oct 2018 to Feb 2019, many small and mid cap companies have seen steep fall, and few large caps have shown corrections too. My advice is to keep a watch on your favourite companies and ‘buy at dips’ , as many good companies have already or would, come to buying range soon.
Avoid Panic Selling!
Many Companies which gave hefty returns last year have fallen. Many retail investors have sold in Panick too. But, it is the right time to enter into some good companies for long term.
Stocks are falling as many FIIs are exiting Indian markets. But for a retail or Indian investor this is a great opportunity to enter markets. These kind of opportunities comes once in a decade.
Staggered buying: Buy in chunks
The strategy for buying during big market corrections are:
1. Make list of well managed large and mid caps.( the ones which you always wished to have in your portfolio).
2. Arrive at purchase price for each of them either based on Value or Growth I potential.
3. Prioritise them based on potential returns.
4. Monitor the regularly for stocks which come to YOUR buy price range.
5. Start accumulating them with each correction.
Remember “Be greedy when others are fearful”
Always do your own research before buying the stocks.