The worst of times in the market, or at least when it appears that things couldn’t go further below from that point, might actually be the best time to buy stocks and start investing.
We often forget that people actually tend to buy everything when it drops below its original price – think about discounted items in the grocery store for instance – you would rather buy products from your grocery list on a discount, but not the stocks?
This might be a mistake and there are several reasons why.
Buy Stocks When Below Their Highs – When Is the Best Time to Invest in Stocks?
Ideally, you will decide to buy a stock you are holding interest in when the stock falls below its monthly, quarterly or yearly high, because you will make a profit once the stock starts to show signs of rebounding.
However, perhaps the most ideal time to buy a stock is when the stock comes near -20% below its high price – in addition, you need to make sure that the stock has a proven historical record that supports the theory that the stock won’t go far from -20% dip before it takes a rebound.
Invest in High Beta Scores for Top ROI
Almost as by a rule, whenever a stock that has benevolent, or high, beta score, drops below its initial high value, that same stock tends to take an upward turn against the downside trend.
This behavior should result in flattering returns; however, you need to note that sometimes you need to be patient when buying high beta stocks at lows.
Learn How to Trim Your Stock Positions
Trimming can be a rather favorable strategy for generating more cash through your ROI. You can for example take a quarter or the fifth of the stock you own, you may take tenth even if you will, and sell it when you see a rebound.
You use that cash later on to buy more stocks in that position when the stock hits another low, repeating the process based on the market trends in order to generate cash.