Long answer short. Every time is the Right time to invest in Stock Market.
But if you are an active investor then some opportunity will come when you invest, you will make more money. This opportunity is only found by those who are active in the market, not by someone who is just starting to invest in the Share Market.
If you stay out of the market in search of a better opportunity to invest, you will never find such an opportunity. In this situation, you will always think that the next time you will have a better opportunity than NOW, and in that dilemma, you will miss the current one also.
Never ever wait for the best opportunity to invest. Just stay invested and invest regularly in the stock market.
These are some opportunities where you should invest heavily in the stock market.
When the market got CRASH
How will you know the market has crashed?
When the benchmark of the stock market has gone down by 20-30 % from its high, then we can say that the market has corrected.
Every market correction is a great opportunity for an investor to invest. Those investors who have saved surplus money invest all in the market. Those who do not miss the opportunity.
Recently with the rise in the Corona case, there is deep panic in the market and the market has corrected. We all have witnessed that.
We also witnessed how great the investment opportunity was. From its bottom market has almost doubled in value.
A market correction is always a great opportunity for an investor. But it’s not that you just wait for the market to crash. You will never know when the market will crash next time.
When Something wrong with a fundamentally strong company
Sometimes what happens is that the strong fundamental company faces some temporary problem. These problems are temporary.
When any bad news comes about the company the stock price of the company started to go down. There is no reason for prices to go down. It just goes down out of emotion.
Characteristic of a Fundamentally strong company
- Companies should have little debt. You can assess the debt of the company with the Debt to Equity ratio. This ratio should be less the 0.5.
- Companies should have a high Return on Equity(ROE) AND Return of Capital Employed(ROCE).
- Companies should have a Book value of Less than 1.5.
- Companies should have increased sales and profit Growth.
- Companies should have positive Free Cash Flow.
Some well-informed investors are looking for these types of investment opportunities. They know the economics of the business well. They know the problem is temporary. The company is going to come back.
They are value investors. They know the underlying value of the business. With their knowledge about the company they value the business and calculate the intrinsic value of the company.
You can also grab these types of opportunities in the market. Look for the business that is in temporary trouble. And its price is going down due to that emotion in the market.
And invest in that company.
When you understand the company well
Sometimes the best companies are those whose products we use in our daily life. We use these products and are happy with their product and services and still, we do not invest in these companies.
If you find such a company around yourself, research those companies and invest in them. Because those companies which give good Customer Experience will last longer and give good returns.
It can be a very good investment for your retirement.
It is also the best practice for investment. If you are looking for a company to invest in, start with surrounding yourself first.
You use different types of products every day. If you just make a habit to find the listed company with the product. You will find some good companies for your portfolio.
When there is Fear in the Market
Fear arises with Doubt and lack of vision.
Fear in the stock market arises when it is difficult to predict the market movement. When The market is rising everyone is happy. There is a bullish trend in the market.
The Stock market is only driven by two emotions: Fear and Greed.
When the fear arises in the market everyone starts selling. When there are a large number of sellers in the market, the stock price goes down.
There is a Saying of Warren Buffett:
“ Be Fearful When Others are Greedy, Be Greedy when Others are Fearful.”
Further Reading: 50 Warren Buffett Quotes of Investing and Life.