Stock Market is like a pendulum that swing from one direction to another means stock market are irrational they make new highs and new bottom base on news, current economy scenario. If they make new all time highs means it forget about valuation, companies profitability and become very expensive. If market condition is not good then market fall like a knife and makes new all time low that irrational behaviour of market give us a golden chance to invest into stocks.
Stock Market works on basis of demand and supply, fear and greed, love and hate, etc. Some times people are wiling to invest into stock at much higher valuation but they expected market will rise from this levels.
Best Time To Invest Into Stocks ?
We discuss how stock market behave like a fool, but it gave us best chance to invest.
Best time To invest :-
1 ) When Crashes happen because of external reasons then this is best time to start your journey. Warren buffet said that ” Invest in Red, To See Green “. This famous quotes show that those who invest into down market condition then they make huge profit.
2) If company have some short term issue like brand image, court issue, cash flow issue, payment issue,etc for ex Nestle india have maggie related issue in 2016, nestle india share price fall 25% in one months but after issue was solved share price again hit new time high.
Points To Remember before invest into crashes :-
- Invest into fundamentally strong companies
- Never buy penny stocks
- Always invest into cash rich company
- Low Debt to Equity ratio companies