【When to Buy? from Common Stocks and Uncommon Profits】

【When to Buy? from Common Stocks and Uncommon Profits】CLEC Club

Writing date: Feb 11, 2019

The core of successful investing lies in learning how to discover a small number of stocks whose earnings per share may grow amazingly over the next several years.

By comparison, "when to buy?" becomes insignificant, does it not?

When you encounter a good stock, any time is a suitable time to buy, is it not?

If you choose the right stock, as long as you hold it long enough, it will eventually bring some return, and often a very generous return.

Ordinary people decide whether to buy or temporarily wait and see based on economic conditions or market conditions.

The author opposes doing this, not because the method is theoretically unreasonable, but because human economic knowledge is currently insufficient to predict the future direction of the economy.

The correct time to buy does not lie in research on the economic outlook, but in the characteristics of the growth stock itself. 【Have you chosen the right stock?】

Investors should buy companies led by exceptionally capable management teams.

Investors must have enough confidence in the company and know that some obstacles are only temporary.

If these troubles cause the stock price to fall noticeably, but the problems can be solved over time, then investors can comfortably consider buying at this point.

As long as you buy the stock before earning power has been fully reflected in the stock price, you will have a chance to buy the right stock at the right time.

This does not mean that an investor with cash can put 100% of the funds into a good stock as soon as one is found.

Individual stocks may fall 40% to 50% from their highs during a general recession, so completely ignoring the economic cycle is also a kind of risk.

If investors have already put money into many carefully selected ideal stocks over a long period in the market, then they can be calm about this kind of risk. 【If these stocks bought earlier should already have brought quite generous capital gains】The author believes that such investors simply do not need to guess the future direction of the macroeconomy or stock market. Once these investors encounter a suitable buying opportunity, they should put in an appropriate amount of capital.

Investors should place their bets on things they understand, not on things based only on guessing.

But some investors have never invested in the stock market before, or have just moved funds out of conservative bond investments. Can they still ignore the harm that an economic depression might bring? If these investors later discover that they have trapped most, or even all, of their assets at the highs after a long-term rally, or that the market crashes shortly after they buy, their situation will certainly be bad.

Buying everything at the high is indeed a problem, but the solution is not too difficult. It only requires a little more patience.

Investors just entering the market, or those who have just received new capital, should begin buying once they find one or more stocks suitable for investment; however, they should be selective about timing when adding more after the initial purchase.

They should plan to keep the last portion of their funds on hand for several years. If the market drops sharply during this period, they will have idle capital available to seize the opportunity and buy at low prices.

As long as they do not put all their funds in, they can naturally be considered skilled investors who can operate capital with proper efficiency.

All types of common stock investors must remember one basic concept.

There are at least five forces operating in the market:

1. Current economic conditions are only one of the forces in the market.

2. Interest-rate trends.

3. Long-term inflation trends.

4. New inventions, new trends, and new technologies.

5. Finally, and perhaps most importantly, the above forces rarely push stock prices in the same direction at the same time, and no single force remains in the lead for a long period.

Therefore, the investment method that looks most dangerous at first glance is actually the safest method: 【once you discover a company worth investing in, take action immediately. As for fears or expectations arising from all kinds of guesses, inferences, and imagination, just ignore them all.】

To summarize the above content from the book: for friends to whom we keep recommending investment in the indexes SPY QQQ, indexes are always the best. You do not need to analyze an individual stock's industry, financial statements, and so on the way you do when buying individual stocks. So when you have funds, directly buying indexes is the safest investment method. Of course, as the book says about capital control, you always need to keep part of your cash for emergencies and for buying opportunities when the market panics and falls in the future.

This is an investment book worth reading.

Common Stocks and Uncommon Profits, classic new translation edition

Common Stocks and Uncommon Profits and Other Writings

Common Stocks and Uncommon Profits, classic new translation edition

Books.com.tw link

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• Author: Philip Fisher Follow author��New feature introduction

• Original author: Philip A. Fisher

• Translator: Chen Min-jie

• Publisher: Global Publishing Subscribe to publisher new-book alerts��New feature introduction

• Publication date: 2016/07/18

• Language: Traditional Chinese