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Is this the right time to buy stocks? Are the valuations too high?BY: David Prakash Kumar | Category: Business and Finance | Post Date: 2009-09-30
Stock markets have been racing up at a break neck speed. There is a day or two of profit booking and then there is a spike in the markets. People who have waited on the sidelines waiting for a correction to put in their money have been left holding air in their hands and are not able to comprehend what to do. Experts are debating whether the sudden spurt in the market is due to a growing economy and the start of a new multi year bull market or if it is the sudden and massive rally in a bear market that will pull down the indices to still lower levels went they fall. Nobody knows what is the future of the stock market, but what people know is that the investments done in equity markets will help them to gain a larger income on the long run even though in the bear term the investments look risky. There will surely be a correction that can at least last for a few days and these should be treated as buying opportunities. If a person buys at the current levels, the risk is high and the reward may be limited. In this kind of unpredictable scenario, it is better to buy stocks that are blue chip. This way, even if this rally is a bear market rally, the equity markets may go down, but when the markets start another phase of the bull market, the blue chip companies will be the ones that rally first and give you manifold returns. Methods of investing in this market: 1. Do not invest more than 50 percent of your extra money. This is because there ay be a correction anytime in the market and if that happens, you need to have money in your hands to buy the stocks that are at a cheap valuation. 2. Do not borrow to invest money: This is because borrowing to buy stocks can land you in very great trouble. You will have to repay the loan you took or at least pay the interest. If there is a correction that lasts for a long time, you will not be able to sell the stocks and also you might lose all the money you have by repaying the loans. 3. Invest in cheap valuations of good companies: All the companies have had a very great increase in prices. It is difficult to find cheap stocks of good companies. Research a lot and value buy these stocks and they will reward you in the long term. 4. Be ready for a correction: Always be ready for a correction and book profits at each higher levels. Try to buy back into corrections. This may not always be possible. So if you do not want to take the risk, leave your investment for the long term Invest for the long term: Invest f the long term instead of trading for weekly or monthly gains. Long term returns will be very great compared to the amount hat you are going to get in the short term. Article Source: http://www.saching.com About Author / Additional Info: I am a physiotherapist and also a freelance writer. I have been writing for many blogs and websites and also take up freelance assignments. Comments are welcome at prakashdavid@rediffmail.com Additional Articles: * Within Astrology And Divination * Yoga and Meditation * The progressive stages of love in human beings * Methods to save money by smart shopping * How to attract younger women? Tips for older men to date a young girl Does this article violate or infringe on your copyright ? It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you. Comments on this article: (0 comments so far) * Additional comments are now closed for this article *
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