Is this the right time to buy stocks?

Is this the right time to buy stocks?

Before asking yourself the question, Is this the right time to buy stocks? you must first ask yourself, when is the right time to buy stocks?

Suppose you found a car similar to your 6,000 dollar worth car selling for 200 dollars? Isn’t this the right time to buy it? yes of course, you are buying something way less than its fair value. The same goes for stocks, the right time to buy one is when it's selling far below its fair value.

The market direction

Technical analysis depends on many principles and one of them is that the market has a trend and the trend should be your friend. Thus at times when the market is heading down you should be shorting selling and at times when the market is heading up you should be buying. However technical analysts forgot that at down-trends some stocks go up and at up-trends some stocks go down.

Determining the market timing is almost impossible, no one can guess what news will be released the next day and no one can anticipate the unexpected problems a company might face, so in order to make money from stocks you have to buy the present and not the future expectations.

Search for companies that are selling below their fair values and buy them with disregard to the market direction and you will end up with good profits.

Value traps

When companies face financial distress investors start dumping their shares at low prices thus making the companies appear to be undervalued. This are called value traps, when shares are down because of expected problems then this is not the bargain you are looking for, instead, you should be looking for companies that went down in value without having a strong reason to justify this price drop.