Hello you very intelligent and caring people that make up this forum. I do hope your day is going well so far.
I research shares i am going to buy in detail, from looking at how the company makes profits, how much debt the business has, what do employees say about working for the company. I also look into the annual accounts for the last few years in detail. However i am really poor at trying to buy stocks on dips when adding them to my watchlist. I understand it might not be wise buying a stock when it is reaching its 52 week high, but does anyone kindly please have any thoughts on finding a better way to trying to buy stocks at more reasonable levels? I know there is no magic formula, but if anyone could kindly help me with this i would be forever grateful and thankful.
Thank you so much for your time. Sending you lots of good wishes and hope you enjoy your day. Take care.
don’t try to time the market is a good start.
Research would disagree with you. Look up “George and Hwang 52 week high” on a search engine such as Google.
I think they meant Hwang was on a 52-weeks high when he was buying stocks.
Thank you very much for all your replies, i am very thankful for the time you took to reply.
Dao i completely understand not trying to time the market is a good start. However i please wondered the best way to try buy stocks on dips or at a lower price? Even if this does not matter completely, as i would have already done alot of research into the company, i please wondered if you had any further advice on this please?
Thank you so much for any advice you can give. Take care and hope you have a lovely weekend.
I dont time the market overall, but I think its wise to choose when to deploy cash into which stocks. What I mean is so lets say I have 10 stocks I own, and I now have some cash to invest. There might be 3-4 that are highly valued, 3-4 around fair value and then 1-2 that have been beaten down price wise. All things being equal it would make sense to put new money into the beaten down ones first. However if its because the business fundamentals have changed that muddies the waters, also depending on position sizing (ie risk management)
Best way is to monitor the stocks you own, for example I monitor their FCF yield, P/E, div yield etc and colour code them on my values I want so at a glance I can see ‘oh x stock is now at an attractive FCF yield’ then that helps direct my up to date research on why that company might be cheaper than previous.
Well, if you already did such analysis of your companies pick, by that point you’d already have a fair valuation by DCF, to which you’d add some margin of safety.
Then you’d buy every time the share price dips lower than your calculated price, as long as no major change inside the company caused the price to dip of course.
If you target a more regular investment approach, some DCA, then any period (such as now) of discounted securities across the board present favorable prices; and it doesn’t matter too much that maybe tomorrow’s price would be better, as long as today’s is.
the issue is that you will never know if you did buy the dip until its truly well and done and beginning to recover. its the same for looking at a chart and knowing if the stock is actually cheaper than before or if the company fundamentals changed. if you have done your research and you are happy with the price, then there is no issue with buying whether it seems high or low, but to even out the odds you could buy in chunks rather than getting everything in 1 go. cost averaging is a great low-risk way to build your position even if it means you don’t get the best price.
I am on the other end of the spectrum, I keep ending up buying the peak about 3days before the crash and dips occur
Thank you very much for your responses, these have answered my questions perfectly, thank you again for your support, you have been more than helpful.
Hbomb, i think thats a very clever strategy you deploy and i agree it would make sense to put money into the beaten down stocks first. Its very interesting that you colour code your stocks on values and you monitor the FCF yield, P/E, dividend yield etc, i really appreciate you sharing your thoughts on this.
Dao i truly understand haha, you would never know if you did buy on the dip and its me also that buys on the peak about 3 days before the crash haha. I agree buying in tranches could help with risk and is good cost averaging. I appreciate your thoughts on this.
Thank you again for all your replies, you have been amazing. Hope you have a pleasant day.