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I keep hearing, now is the time to get into stock market because of bargain prices, but purchase what stocks?
Answers
2183 points
ChaosNantuko answered 11 months ago …
If your not sure which stocks to go with, the easiest way to go about entering the stock market would be purchasing an ETF such as the S&P 500 SPDRs (SPY). Then your diversified across the entire united states stock market without as much risk as would come from buying individual stocks. In terms of exactly what stocks might be good purchases right now, it really depends on your risk tolerance.
If your willing to take high amounts of risk, it may be time to buy financial stocks. They've been hit by a lot of bad news in the last couple days, without going down significantly. This is a sign of strength. One ETF representing financial stocks is the "Financials SPDR", with the ticker symbol XLF.
A safer play - albeit with less potential reward - would be investing in the healthcare sector. With an aging population, these companies are sure to be increasing there earnings in the near, foreseeable future, and so healthcare companies should do well. One ETF representing health care is the "Health Care SPDR" and its ticker symbol is "XLV". Once again, it has the benefits of some diversification, while specifically targetting the health care sector.
There is still a chance the whole stock market will go lower. I'd currently say that its around a 50% chance that occurs. If your in it for the long haul, it may be time to begin buying these stocks, but consider purchasing just half of what you intend your final position to be. That way, if it does go down, you have smaller losses, and if this ends up being the bottom, then you can buy the rest on the way up and make almost the same amount of money.
120 points
mario answered 11 months ago …
Just my 2 cents... The question you asked gave me the impression that you dont know much if anything at all about investing in the Market.. And theres nothing at all wrong w/ that you've come to a great site to learn.. I wouldnt exactly just jump in myself if I didnt know much of nothing about investing in the Market.. Investors that make money in the Market or consistently generate income from investing dont just make this happen w/ luck or rolling the dice on a stock that might go up or might go down. Investors that make money in the Market are the ones that are on the right side of the trade and this happens by Education... I would get my hands on some good books about Investing and learn all i can and while this Market bottoms out (which can take months) get as much info and knowlegde about the subject as you can
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3943 points
MNSL answered 11 months ago …
In addition to above good answers I like to add some more.
Investment sector is one of the most controversial areas in the human history. There are different types of players, instruments and institutions. These human beings and instruments can make havoc in the market.
Those who have information and knowledge in the market will have advantage over others. Therefore it is vital to identify risks before putting our money in any asset, stock or commodity.
Not all the analysts, top investors, rating agencies, brokers, investment houses, top economists and bankers etc are correct. . Some have bias towards their investment.
In addition we must have good understandings in the following areas as well:
Ponzi” schemes
Gold coin pyramid schemes- (These are very popular in Asian countries)
Real estate pyramid schemes
Some other factors to watch:
Recently some currencies went up despite interest rate cut.
Oil prices is coming down despite OPEC cut and higher US Dollar
Some investors are very good at identifying correct stocks at the correct time. Even now some investors have invested in quality stocks and stocks which are going to outperform in the sector oriented bull markets in the next 18 months and next decade and in next rotating sectors. Current mess has made some sectors more attractive now.
678 points
BoxCar answered 11 months ago …
IF its true SubPrime mortgage resets of 2006/07 are the root cause of economic
meltdown and collapse of the stk mkt this fall, then wait until the other shoe drops
All the ARMs scheduled to reset in 2010/11. Google [mortgage resets] to find chart.
Reason commodities and OIL have declined is NO Demand regardless of Supply.
Be aware that historically we are setup for a 2nd Great Depression- happens after
every great war, historically. Means the Feds can Float the Bloat for only so long, &
sooner rather than later, runaway inflation has to set in as money printing presses
run amuck. Am I wrong? Wish I were. Watch Gold (GLD) and Silver (SLV) take off.
896 points
jillybeansisme answered 11 months ago …
Every investment newsletter, financial website, financial news station, blog, etc. will have its own opinion and one opinion will be the opposite of another. So what's a person to do? Read and educate yourself. Skim the sites and get the general feeling of them for both the pro and con side. Just because stock prices are bargains doesn't make them worthwhile as investments.
Before you invest a dime, figure out what your budget is -- how much money do you have to invest? During these volatile times, do not put more than 1% of your total portfolio into any one stock. Make sure you have different classifications of investments (stocks, bonds, etfs, etc.).
Use common sense. When times are tough and money is short, what do you spend your money on? Most people will always spend money on consumer staples such as toilet paper, soap, etc. What else do you spend your money on? Healthcare, which includes biotech.
If you want to get a bit riskier, you can invest in Industrials, which would include infrastructure and heavy equipment manufacturers.
Of course, now that oil is beaten down, it would be a good idea to invest in that sector.
Don't put all your eggs in one basket.
4075 points
EthanR answered 11 months ago …
RDC, assuming you have a long term investing horizon (at least 10 years before retirement), I would be purchasing the great long standing companies that have been beaten down during this recession. For example, I see outstanding companies like DIS, DD, AA, SLB, GE, BAC, and others at incredible prices now. Yes, they could go lower before rebounding, so do not buy in all at once.
These stocks that I mentioned are not specific recommendations, and please do your own careful research. I am merely pointing out that companies like these that have been around for decades and have prospered, usually come back after every recession. History is on the side of saying it will happen again. Take a look at long term charts of these companies on yahoo finance. You will see that in 2002, many of them were way down and came back again.
So what I suggest you do is get a list of DOW or S&P 500 stocks, and go through them, and look at which stocks have been severely beaten down. Then do some research to figure out which ones are likely to do well, once the recession ends. If you are still not sure, then the suggestion given by Chaos to buy the index ETF's is certainly a good one.
