When To Buy In A Falling Market?

  •  3 min
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  • 24 Apr 2023

The vast majority on Dalal Street last year expected the stock market to rise in 2022. Whoops! The chatter about the hot stocks to buy died down soon. The party in the stock market is long over.

The question on everyone’s mind these days – We keep seeing that the stock market is going on hitting lows. But does that mean it’s a good time to buy stocks?

Recall the wise advice – Be greedy when others are fearful – Yeah, it's all well and good if you're Warren Buffett. Most investors are in a dilemma during such periods and are faced with the big question: ‘When?’ What if the markets fall further after you buy a stock? Our savings don't need a hero during the periods of high risk of course!

Obviously, falling markets are not the happiest of times. What starts out looking like a mild correction could prove to be a bigger crash! Just like it happened with the dot-com bubble implosion of 2000s, or the slump of the global recession in 2009.

One of the worst things you can do in a bear market is make knee-jerk reactions to market movements in the short-term. No one knows where the market is going from day to day during volatile times. Over the period, herd behavior can initially inflate prices. But if you rely on the emotions of strangers to set prices for you, you can also lose a lot of money when the market falls.

Everybody’s main goal of investing is to buy low and sell high, but by reacting emotionally to market swings, you're literally doing the opposite. Invest in stocks that you want to own for long. And don't sell them simply because their prices went down in a weak market.

It is a great time to buy in a falling market if you are truly in it for the long run. But no, if you want to make money quickly. The trend in the stock market so far this year has been negative. The market could start rising tomorrow or keep trending downwards for a long while. No one really knows.

Trying to time the market is generally a losing battle. Instead of catching the bottoms and throwing all your money in at once, a better strategy would be to buy gradually. And set yourself up with solid, diversified, portfolio of good quality companies. Remember, never put all eggs in one basket. Along with proper research, understand the risks you are taking. And consider why you are buying stocks in the first place.

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