Professional Trader Explains When is a Good Time to Buy the Stock Market?

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So when is a good time to buy the stock market?  First, nobody knows the answer to this question. Of course, experts have more ways to win than beginners. Meaning experience and knowledge will increase your chances of being right… but nobody can predict the future.  Which is why the famous phrase is it’s not about timing the market, it’s about time IN the market.  Therefore get started!

So what am I going to cover in this post/video?

A few key points to consider to answer the question:

• – Your timeframe. Buying for 5mins is totally different to buying for 5 years.
• – Your thesis. Why are you opening this position. How likely are you to be right over the desired timeframe?
• – The current price and therefore fundamental value of the asset right now.

So that’s the summary, but please stick around and I’ll share some of my experience and expand on these points.

So here we go, firstly, I know youtube/Insta/tiktok all try and tell you about the sexy latest trend to make a million dollars in three seconds doing next to nothing but sadly I need to burst that bubble, generally, boring is what will make you rich!

Meaning, consistent investing with a tried and tested prudent long-term strategy is the highest probability strategy that will get your wealth to grow over time.

And time is your biggest ally on this journey, so start early and invest often.

Now, I know this is maybe not what most want to hear, but it’s been proven time and time again.  Stick to the basics for at least 80 or 90% of your capital, if not 100%, and you will stack the odds in your favor.  That’s the best advice you will get.

Outside of that, if you want to take much higher risk with crypto or otherwise with a small part of your capital 5-10% to maybe strike it rich.  Then go right ahead but it’s the lowest probability strategy. Sorry, not sorry! I am hoping to be a voice of reason with this channel.

Now of course, when I say boring, I don’t mean put it in the bank or worse, hide it under your mattress!  That is ridiculously boring!!!! 

If you’ve read many of my other posts or watched my YouTube videos you will see I am a big supporter of taking calculated risk.  You must give your little money soldiers the best chance to go out and work hard and grow to bring back more money soldiers for you.  This, in my opinion, means stocks and real estate!

For today I’m just focused on stocks but I will get to real estate another time.

So let’s get onto my points and some examples.

• – Firstly, your timeframe. Buying for 5mins is totally different to buying for 5 years.

If you are planning on being a day trader and investing for short timeframes, 5 minutes or otherwise, then good luck, it’s a tough emotional journey!  When I started work as a professional day-trader on one of the biggest trading floors in the world, my boss, who had been doing it for about 20 years, said to me, if you can be right more than 60% of the time you’ll be fine. If you can be right 70% of the time you’ll be one of the greats.  So this means you’ll be wrong 30-40% of the time to be great at your job.  For most people, this level of constant failure is soul destroying.  It’s a truly hard concept to embrace but that’s what it takes.  I will create a future post/video about day trading.

Whereas investing for the long term (say 5 years) requires a totally different approach.  Like I suggested in my recent post/video, it can be as simple as investing in an S&P500 index tracker. Or it can be as complex as understanding the fundamental value and long term vision of a specific stock and investing in that, which I will elaborate on in another post/video.

• – Secondly, your thesis. Why are you opening this position. How likely are you to be right over the desired timeframe?  You need to ask yourself these questions and develop your critical thinking engine to get better at understanding the key drivers of a stock or market over the timeframe you have chosen.  For most, this process is quite stressful and therefore why I suggested just buy the S&P500 index tracker and invest in it regularly.  So as the famous phrase goes, it is not timing the market, it is time IN the market.

• – Thirdly, the current price and therefore fundamental value of the asset at the moment.  This is a truly key point.  If you buy into a stock or even the S&P500 after it has become fully or even overly valued relative to earnings for the current or future period then you increase your chances of not making a great return for coming period (6-12 months) and also increase your chances of seeing paper loses in the near future, as other investors take money off the table in that investment and invest elsewhere.  None of this really matters, assuming your thesis and timeframe are still intact.  You expect the global economy and US market to do well over the long-term, then stay invested long-term in an S&P500 index tracker.  If the market sells off for some random catastrophe like we saw last week with the Nikkei and weaker US jobs data.  Then buy more as your thesis and timeframe have not changed.

Ultimately, in summary, the best time to buy is now, as time IN the market is far more important than timING the market. Of course, it also comes down to when you have the capital to invest and, secondly, when you have decided on your strategy for investing (as I have tried to start to share maybe just an index tracker is good enough for most starting out) and finally when you might need that capital back (what’s your investment timeframe?).  So I hope I have helped answer the question.

Of course, there are far more nuances you can consider under each of the three categories I have listed today

• – Your timeframe.
• – Your thesis.
• – The current price/fundamental value of the asset right now.

…but…many more posts/videos to come!!! So I will help go into those details for those that want to consider more things.  Although as I have said, getting started, time in the market, taking some control, is the 80% in terms of the 80:20 rule.  But don’t worry, I will get into the details over time.