"You never get the high and you never get the low." - Walter Schloss
When it comes to investing, there are quotes from seasoned professionals that offer valuable insights. Walter Schloss's quote reminds us that it's difficult to perfectly time the market and capture the highest highs or lowest lows. However, there are strategies that investors can employ to improve their chances of success.
One simple tip often shared among long-term stock investors is to "buy the dip." This means taking advantage of temporary declines in stock prices to purchase shares at a potentially discounted price. It's important to note that this strategy is more applicable to long-term investors rather than short-term CFD traders.
Recent market events, such as the Fed's decision to raise interest rates, can lead to volatility in stock prices. For example, after the announcement, stocks initially rose but then turned negative during Fed Chair Jerome Powell's press conference. The market reacted to the indication that interest rates might be raised higher and for a longer period than previously anticipated. The Fed also revised down their GDP growth estimate for the next year and adjusted their unemployment projections.
Despite the potential market uncertainties, some analysts interpret the hike and comments in line with expectations and telegraphed signals. They believe that the stock market still has room for growth, supported by favourable seasonal tendencies and historical patterns.
It's worth noting that bear markets, or significant declines in the stock market, have occurred multiple times in the past few decades. Each downturn is unique in terms of severity and duration. For example, the dot-com crash in 2000 lasted for over two-and-a-half years, while the coronavirus crash in 2020 hit its bottom in just a month.
Timing the market perfectly is challenging, and Howard Marks reminds us that trying to sell before a downturn and buy back at the absolute bottom is often a futile endeavour. Instead, focusing on long-term investment opportunities and selecting stocks in sectors such as healthcare, financials, energy, industrials, and defence, which offer above-average dividend and buyback yields, may be a more practical approach.
Ultimately, the decision to buy stocks depends on individual circumstances, risk tolerance, and thorough research. Consulting with a financial advisor or conducting in-depth analysis can provide further guidance in determining the right time and opportunities to invest.