Is now a buyers market or should we still wait till it bottoms out?
Whether you're buying properties, holiday gifts, stocks and anything else. If you still have your job and you're making a decent salary. Is it a good time to buy or should we still wait until things bottom out?
Best Answer
4075 points
EthanR answered 11 months ago …
Chidog, if one waits until markets "bottom out", you usually miss quite a bit of the move off the bottom. You will never catch the exact bottom, and judging from your picture, I would say that you have plenty of time ahead of you before retirement. If you have a job and decent salary, you should be buying now with both fists, whether that be quality stocks or properties. Both have been trounced, so there is actually a lot less risk to buying now than there was 1-3 years ago. Dollar cost averaging into stocks, or just buying one property per year will give you enough risk abatement to be able to sleep well at night.
If you buy now, I can't promise you that stocks or real estate won't go lower over the next 6 or even 12 months, but I can promise you that in 20 years you will be a heck of a lot richer than 99% of your peers! Good luck.
Answers
989 points
rvilmur answered 11 months ago …
We are in the time of the year where there is often a Santa Claus rally. So I would only be a cautious nibbler here and not commit a major part of your cash. You should also lighten up on positions that will have a hard time in a recession and look for candidates for shorting in early January.
The extent of the recession is as yet unknown and the stock market, while it normally anticipates the end of the recession, will not put in a bottom until some time next year. You only really know when the market is bottomed until well after it has happened. If the next test of the November lows holds, maybe that will be it; but do expect another test of those lows.
178 points
KenTrester answered 11 months ago …
We're currently locked in a trading range on Dow, with the low end around 8,000 and the high end currently at about 9,000. A break above that could send the average quickly to 9,500 and maybe beyond, which means that this could very well be a good time to establish longer-term plays.
However, buyers so far have been unwilling to take that next step higher that pattern was reinforced with Thursday's sell-off. The main culprit for the caution is the economy. Investors who are buying stocks think that the worst, if it hasn't passed, is at least priced into stocks. But collapsing oil prices certainly call that outlook into question.
While some of that selling could be due to hedge funds liquidating commodity positions, it is also a comment that in a weakened economy oil traders do not expect demand to pick up anytime soon.
Also under fire now is the dollar, which has sharply reversed course following a three-month rally. In fact, the dollar has fallen below its 200-day moving average, a key technical sell signal. Further weakness, while maybe beneficial for U.S. exporters, would not be good for financial markets.
Until stocks can break out of their trading range, we're going to be in a trading range, so, while I focus on options trading, you'll likely find some good short-term trades, but the long-term picture is still too murky to tell.
If you are familiar with options trading, or would like to start, my advice is when the Dow reaches 9,000, buying puts should be your focus. When it drops back to 8,000, for the past couple months buying calls has been the way to go.
As always, pay as low a price as possible for your options, and take profits quickly when they are there. Also, take smaller positions than you normally do, regardless of which investing vehicle you use.
3943 points
MNSL answered 11 months ago …
I think it is time to buy some stocks globally now. Today’s market is better than yesterday due to lower oil prices and combined global interest rate cut.
There are excellent opportunities in some sectors globally now. These companies bottomed out in November 2008 and maintaining excellent support level.
Of course some stock prices have gone up and these stocks will recover rapidly further over others. Some stocks already have appreciated over 50% and there is further upside for these stocks during next 12 months due to demand. In addition money is flowing to these areas from hot sectors now. Toward end of next year some sectors will recover dramatically.
Money market and stock market is the first place to look for any recovery as other assets and commodities will take longer period some time more than 05 years to recover due to current mess, wealth destruction and demand destruction. There are other factors such as higher unemployment until 2011 also will make some asset markets more vulnerable.
For example estate market in UK and some commodity countries will come down by more than 35% during next 18 months. Even Dubai real estate market will come down drastically. Real estate market in Asia including emerging markets and less known countries in Asia will burst sooner than later in the next 18 months.
Further there will not be liquidity for some assets at lest for next 05 years. We should not forget there is liquidity trap and as a result of this some assets prices will come down drastically in the next 18 months. Currency market will stagnate. Some currencies will go down further.
However, hot sectors will underperform market in the next 12 months. Next rotating sectors and .some quality stocks will outperform market globally. This is the time to be in correct sectors and correct stocks. It is also time to change our money managers, fund mangers, banks etc.
