Is now a good time to buy stocks and shares due to the way the market is?

dreamybee

Hey guys,

I was just wondering - due to the credit crunch - inflation - recession and everything else that is going on - do you think that now is the best time to buy stocks and shares with my bank as I can buy shares at a lower price - as hopefully when things are back on track the price of my shares will increase???

What do you think??

Dreamybee

1echidna

I'll try to give you an answer even though you should regard it as completely unauthoritative. Have a look at http://news.bbc.co.uk/1/hi/business/7202412.stm . For myself I regards shares as good value at the moment. Lots of arguments for them going down further, at least in the short term, though.

spalding

The million doller question if anyone knew the answer they would be lots of money to be made!

But my personal thought is its not a bad time for money you can afford to risk and don't mind locking in for a few years, I know I'm buying at the moment

dunstonh

The only way of answering it is to say that at the moment it it better than any time since 2005 to buy shares. However, whether it will be better in 2 months, 6 months or a year we will only know then.

A 20% drop is large and the reasons for the drop obvious. However, the last major drop was 45% so we have some way to go yet to match that one. We may or may not match it.

chopperharris

see an ifa , and diversify to reduce risk , If your thinking about one large block of shares in one sector then dont.....unless you are willing to lose all on the risk of manking some.

purch

What do you think??

Most Equities are certainly cheap in respect of where they were valued 12-18 months ago.

That doesn't necessarily mean the same as they are cheap in actual terms.

when things are back on track

The important question to ask yourself is, are things 'off track' currently, or were things more 'off track' 12-18 months ago.

Were valuations over optimistic then, or are they overly pessimistic now.

In my opinion it is going to take a long time before the Economies of the 'developed' world to get back 'on track'

There will be more turbulance, and more volatility.

jamesd

In May I arranged to put a large portion of my monthly salary this year into my pension because I thought that prices would fall this year and possibly next and make it a good time to buy.

Now is not the time when I think it's best to be making large lump sum investments in stocks and shares and I'm using lower risk options for most of my money that is not yet invested in them. Which means that I think there's a strong prospect of more falls and that I'm currently willing to miss the first part of any upturn.

It's a better time for regular investing, aiming to put say 1/12th to 1/18th of the money into the markets each month. That will reduce the downside risk but also some of the potential upside if the markets recover before you have finished buying.

Using your bank for share dealing is probably more expensive than using an independent broker.

JayZed

Shares are certainly cheaper than they have been for a few years, and now may be a good time to invest - but if I could predict these things with real certainty I'd be a rich man!

Some good advice upthread:

(1) Seek advice and/or educate yourself about the market;

(2) Diversify - between specific shares, between sectors and between markets;

(3) Safer to drip-feed your investments on a monthly basis rather than bung it all in in one go;

(4) Investing in shares is a medium-to-long term game. If you think you'll need your money within the next 2-3 years, you're probably better off with cash savings.

Nick_C

Think of the stock market as gambling for the middle classes. Don't play with more than you can afford to lose. Personally, I think we will always need food and banks, and I'm buying a few shares that seem cheap at the moment, but I'm doing it with money that I can lock up for up to 10 years and not miss.

GeorgeHowell

Shares, like property, are being shown up as not a license to print money as many thought.

Shares reached their peak in 1999, so the myth that over the medium and long term you will always gain versus cash etc has been exploded. The financial industry will always push shares because that's how they make a living, but it's not necessarily sound advice.

Have a little flutter maybe, but nobody should be putting a large portion of their readies into shares (or property) right now.

runciblespoon

What do people make of this Observer article?

"Decline and fall of the cult of shares"

Have professional investors really divested so much in the last ten years or more?

A few bits that struck me:

Stock-market historian David Schwartz says : 'It is one of the biggest myths that shares offer generous returns provided your time horizon is a long one.If you look at average annual returns from 1900, stocks come in at about 1 per cent; it is only if you re-invest dividend income that the figure rises to 4 or 5 per cent.'

And, uh, if I put my money in the building society and spend the interest will I be surprised if I have no return? Surely the point of the investment is both the income and the capital gain? How else would I get hold of the dividend income without owning the shares?

Are people still investing in shares, but abroad rather than in UK equity? And pension funds are moving away from equity as they have larger percentages of retired or near-retired people?

Or is there really a disturbance from the hundred-year equities-beat-gilts-over-long-term model?