Is Now a Good Time to Buy Stocks

At this point, everyone in the world knows that global stock markets took a massive hit on Monday, August 5. The Nasdaq, S&P 500, the Dow Jones Industrial Average, the Russell 2000, commodities, precious metals, the kitchen sink… Everything went out the door as investors ran for the exits en masse.

But over the past few days, we’ve seen those same markets that crashed start to rebound back up the charts. And that’s got a lot of people agreeing with what I said in my article about a coming crash. It has also gotten people asking the question: is now the time to buy stocks?

Well, I hope to answer that question now and forever with my coverage today. And I’ll get started with the main bullet point of the presentation: now is ALWAYS a good time to buy stocks! There’s never a better time to buy stocks than the present (unless you have a time machine and can go back 20 years to buy them then).  

And I can say that with absolute conviction because I know that, while markets don’t always go up, they go up more often than they go down. In fact, there’s no 16-year period in the history of the S&P 500 index where it wasn’t profitable:

So, no matter how much your investment costs today, you can bank on the fact that if you hold it long enough, it’ll be worth more in the future. That’s why I say now is always a good time to buy stocks. But that’s a general answer and you’re probably looking for some specifics about this market in particular when you wonder is now a good time to buy stocks.

So, let’s talk a little bit more about this market and the challenges it faces before we decide if now is a good time to buy stocks…

Is Now a Good Time to Buy Stocks for the Short-Term

Now, if you’ve been reading my coverage for any length of time, you know that I’m an apostle of the long-term school of investing. I always tell people that time in the markets is more powerful than timing the markets. And that chart I shared earlier proves that I’m right.

If you’re invested long enough, you’re guaranteed a profit. If you’re trading long enough, the only thing you’re guaranteed is heartburn. But I understand the desire to “buy the dip” and “sell the rip.” I mean who doesn’t want to brag about their bold decision to buy at the very bottom? Or gloat about how they sold at the very top before a crash?

But that’s nearly impossible and anyone who does it is definitely more lucky than good. So, I’m always a little bit concerned when people ask me, “is now a good time to buy stocks for the short-term.” But I’m here to serve, so I’m going to give you my take even if I think you’d be better off buying with the intention of holding and not selling.

Is Now a Good Time to Buy Stocks: The Pros and the Cons

It’s a tough question to answer because there are so many variables that control the direction of the markets. Human psychology plays a role. But so does the lack of emotion shown by computer-run trading desks. Algorithms operate on a set of guidelines. When those guidelines are exceeded, they don’t consider underlying value or potential future earnings growth.

They see a mathematical signal triggered and they either buy or sell until that signal changes direction. When markets jumped 2% in the first hours of trading that fateful Monday, it wasn’t people buying the dip. Most of us retail investors were locked out of our accounts by an outage that swept the online brokers from Schwab to Fidelity to E*Trade to Robinhood. It was the algos taking stocks back up after sending them crashing to the ground just seconds earlier.

But it’s not just the humans and the machines you have to consider as far as the short-term goes. There are also the external factors. You’ve got an economy that’s obviously slowing. You’ve got unemployment creeping up. Government spending is outlandish. The U.S. presidential election is anything but cooling dispositions. And we might be watching the start of World War 3 as Iran and Israel get closer and closer to an all-out war.

You’ve got the Federal Reserve keeping interest rates high and, while sounding more dovish, not officially agreeing to any rate cuts yet. But you’ve got other central banks around the world cutting their rates. And you’ve got some hiking them also (looking at you, Bank of Japan 🤬).

Then back to the people side of the equation, you’ve got rival factions in the markets. The bulls and the bears. The people who are desperate for a rate cut and those who think rates are just fine. Those who swear we’re circling the drain and those who remain convinced the economy is more resilient. You also have some very crowded trades out there with much of the market still allocated to the world of Big Tech. Needless to say, there’s a lot going on out there that can impact stocks in the short-term.

But at the same time, all those unknowns could turn out to be positive ones. The Bank of Japan said it wouldn’t rock the boat anymore after it roiled markets with that rate hike. That’s good news. Markets hit resistance levels and bounced back up, showing people are still confident in the future. That’s good news, too. Inflation is getting back down to levels the Fed and the economy find more acceptable. Also, good news. And while unemployment has crept up a little bit, it’s still down at very low levels. That’s more good news.

Iran and Israel might avoid a full-blown conflict. That would be a boon for markets. The Fed might start loosening financial conditions in September. That would make it easier to finance growth. The slowdown in economic activity could be a momentary blip on the radar and not a sign of worse things to come. There are a lot of potential positive catalysts out there in the short-term, too.

So, being an eternal optimist, when I’ve got an equal shot at being wrong or right, I’m a buyer and I think you should be too. Even if we’re wrong and markets fall further, we’ve got a guarantee that if we wait it out (and preferably keep buying), we’ll be profitable in the long run.

Is Now a Good Time to Buy Stocks: The Bottom Line

The bottom line here is obviously that now is always a good time to buy stocks. But it’s also that when it comes to down days in the markets, the best thing you can do is take a big step back and look at the overall trajectory. Markets go down. It’s a fact of life. But another fact is that they go up far more often and the longer you’re in them, the more guaranteed profit you can make.

So, try not to sweat the drops. And if you ever feel like you’re starting to lose your nerve, make sure you head back over to Wealth Daily to remind yourself that fortune favors the bold. And with that, I’ll leave you with the words I shared with the members of my investment community, The Wealth Advisory earlier this week:

Let’s stay the course. Let’s follow our strategy. Let’s ignore our emotions. And let’s take advantage of any crisis the market throws at us by staying confident in the face of adversity.

To your wealth,

Jason Williams

@TheReal_JayDubs

Angel Research on Youtube

After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter; the founder of Future Giants, a nano cap investing service; and authors The Wealth Advisory income stock newsletter. He is also the managing editor of Wealth Daily. To learn more about Jason, click here.

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