Admin Admin Aug 31, 2018 12:46 PM Other Shares When is the Best Time to Buy and Sell? The two most important decisions an investor will make are when to buy and when to sell. The best time to buy is when others are pessimistic. The best time to sell is when others are actively optimistic. When buying, remember that the prospect of a high return is greater if you buy after its price has fallen rather than after it has risen. But caution should be exercised. For example, after the stock of fictitious Company X declined by 30%, 40% or more, the first question to ask is why. Why did the stock fall as it did? Did other stocks in the same industry experience a decline? If so, was it as severe? Did the entire stock market fall? If the broader market or other stocks in the same industry/sector performed relatively well, there may be a problem specific to Company X. It’s best to adopt a buy/sell discipline and adhere to it. Benjamin Graham, the father of value investing, once said, “The buyer of common stocks must assure himself that he is not making his purchase at a time when the general market level is a definite high one, as judged by established standards of common-stock values.” His reference was to what we discussed as the fair value under the section Stock Valuation above. A stock market is a complicated place for which the novice investor is not particularly well suited. Avoid the “hot tip” talk around the water cooler or in the lunchroom. Stock prices rise and fall for reasons which can be complex. Since the only sure bottom is zero, when you invest, consider adding protection (i.e. stop orders, options, etc.). To avoid another WorldCom, Enron, or even a 2008 type of disaster, be sure the company you’re buying is worth owning. Unless you love risk, you may wish to avoid putting too much of your money in one stock. It takes years to become well versed on the financial markets and on stocks in general. You may want to find someone you trust and seek their guidance. It may seem like an unnecessary expense but heading into unfamiliar territory alone can often cost us more than we expect.