Updated: Nov 23, 2021
What do you see when you see "the color red" in the market? An opportunity to accumulate or the panic of selling? This is a really important question that needs to be answered by every investor who invests in the market.
Well, when you ask me. I see the falling market as an opportunity to buy good stocks that are available at a good price. I don't know why but when I see a falling market there is this adrenaline rush into me that wants me to buy as much as I can. But to be truthful too much of this behavior is also not acceptable in the market.
Now coming back to the question, what should investors do in the falling market? My advice would be to see the falling market as an opportunity to accumulate "good stocks" 'coz often at normal days "good stocks" trade at very premium valuation but a falling market gives you an opportunity to buy these stocks at an ideal price/ at times at very good price.
How to approach buying stocks in a falling market?
The one sure thing in the market is, you can never always buy at the lowest and sell at the highest, 'coz the lowest is zero and the highest can never be figured out. So, you should never wait for the lowest price to come rather if you find that the stock price is available at an ideal price buy in a staggered way (accumulating slowly and gradually). But at times if you find a very good stock trading at a very low value or lower than your expected, first check whether is there any such change in fundamentals? If not, go big. 'coz these opportunities are rare, and when you see them grab them. Because as it is said, "Time and Tide Wait for None".
Note: "Good Stocks" means, stocks of a company with Good Moat, Strong fundamentals, competitive advantage over their peers, and leader in its segment are some of the traits of "good stocks".
I would recommend reading our past blog to know when to buy a stock? https://www.thehumaneopportunist.com/post/when-to-buy-a-stock
Until next time,
The Humane Opportunist.