When Is The Best Time To Buy And Sell Stocks?
People can often feel nervous when they first start investing in stocks. As the small print often reminds people, they can go down as well as up. However, as with any form of investment, with the right approach and advice, you can have a better chance of knowing the best time to buy and sell stocks.
What to invest
The first thing that any advisor will let you know is that you should not invest anything that you wouldn’t want to lose (such as savings, money for rent or mortgage payments and so forth.) This isn’t to be overly pessimistic, just that you can be prepared for the worst case scenario.
When to buy
Traditional advice suggests that later months (such as around October) are the best times to invest. Research suggests that people often feel more cautious during this time, and so are often more inclined to sell what they perceive to be riskier stocks. This in turn, means that savvy investors can get these at a cheaper price then they might have done earlier in the year.
Some people have suggested that this may be linked with how weather conditions and emotional interpretation. Interestingly in the Southern hemisphere where the seasons are reversed (winter season earlier in the year, summer later), the trends in investment reflect this as well.
When to sell
Some companies sell stock around January as a means of avoiding higher tax bills, part of what is referred to as “the January effect.” Selling in May is also seen as traditional investment advice, due to the fact that people tend to feel more optimistic in the summer months and therefore are more likely to take a chance or pay a bit more for something they feel is a more secure option.
Of course, this is just one factor amongst a number of others that can affect share prices. Fluctuations in currency, changes in government policy and various other aspects can all affect a share price.
This is why it is important to separate your emotional response from how you invest as much as possible, allowing you to analyse trends from a more objective viewpoint. While it is hard to shut off emotional responses entirely (and sometimes gut instinct can pay off), generally speaking, this is the best approach.
We can help
You are not alone as an investor, and indeed it is strongly recommended you do not make snap decisions before investing. Aside from discussing it with friends or family, getting professional advice will allow you to broaden your financial options, choosing investments that can be part of a bigger long term plan. At Larcomes Financial Services, we have been giving people the tools they need to get more from their money for years. For more information on how to invest in stocks and other financial options, get in touch with our specialist team today, and we will be happy to go over your personal circumstances in more detail.