Saturday, 26 March 2011

When is it the right time to invest in the stock market?

When is it the right time to invest in the stock market?

Investors are scared. There’s so much crisis happening in the world!”
I understand why people are scared.
First, there was chaos in Egypt. And then Libya. Some say the Middle East is like a bomb waiting to explode. Because of the turmoil there, oil prices have gone up.
And if that wasn’t bad enough, the earthquake and tsunami crushed a part of Japan two weeks ago. And the radioactive scare continues.
No doubt about it. 

People are scaredInvestors are scared

So, should you wait for things to settle down before you get into the Stock Market?

Let us Go Back 20+ years in the Philippines...
When Ninoy Aquino was shot in 1983 in the tarmac, chaos ruled the day. Demonstrations burst into the streets. The country was going to the dogs. Wealthy Filipinos fled to other countries. Our stock market crashed. But what was Smart Investor doing? As everyone was selling, he was buying shares in the Stock Market.
Every month, things got worse, and the stock market dove even lower, and everyone was ten times scared. But This Smart Investor was still buying!
But in 1986, when Cory Aquino was proclaimed President in 1986, lovely hope returned to the Philippines. And the stock market rose like a rocket to the sky. Everyone started buying.
What was the Smart Investor doing? He was doing the exact opposite: Selling and making a huge profit.
In Cory’s Presidency, there were six coup d’etat. Six rebellions! And everytime there was a rebellion, people sold their stocks. In every dip, a Smart Investor dove in and bought shares.
The worst coup d’etat was in 1989 led by RAM’s Gringo Honasan. The Stock Market collapsed again as foreigners and locals sold like crazy. And the Smart Investor was so happy. So many cheap companies to buy! And that’s what he did.
That rebellion was squashed, and people went back to the stock market. As it went up, the Smart Investor  was selling again.
He said, “You can be sure that whenever there was a crisis, I was there buying. I bought only giant companies that were earning a lot of money. Nothing was wrong with them. The only reason why their prices were going down was because everyone is scared.”

The Smart Investor wealth today was built in crisis. Not in good times. Not when everything was smooth and happy. He built His wealth when everyone was afraid.”
Don’t Let Fear Stop You
It's a wonderful time to invest in Stock Market Now. There is a crisis in the world today. 

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