There is no getting around the fact that the stock market can be tricky. But when you aim to be a successful investor, you need to put in more effort than usual. As an investor planning for success, you need to go into the stock market with your success strategy. Investing in the stock market is just like a football game to me. I will advise you to see and treat it as such.
Just observe those teams of players who always win the football match; they never go unprepared; they always have their strategies laid out. So many other games exist that they still need a strategy before they can win. You will agree that it is not just enough to buy in stock; you need to know when is the right time for you to carry out the purchase. That is precisely what I will be discussing with you right here in this blog.
You are welcome to another blog edition of my website. I am here with you once again to discuss a crucial topic. But before we go deeply into our discussion on the right time to buy stock in 2021, are you a subscriber? Please, do subscribe to my channel to be able to enjoy more of these mind-blowing topics. You can also check other related blogs like “The Secret of Investing in 2021“.
So, I hope you will enjoy the blog as we go deeper into the stock discussion. Here is a quick reminder; in this blog, I will go step by step into the details for easy comprehension. You can also visit my Facebook page to avoid missing out on the great content on investment being discussed regularly, and you will also get an opportunity to see what I buy and sell. Now, let’s begin.
What is the stock?
You will agree with me that it is best we start by understanding what stock means. Your stock is the security that represents your fraction of ownership in a specific corporation. A stock is also known as equity. Keep that in mind.
What does it mean to own a stock?
After understanding what a stock is, as an investor, what does it mean for you to own stock in a corporation? You can’t go about singing that you have a stock in a company without you practically knowing what exactly it means for you to own a stock. Your stock is the entitlement you as an investor own to a proportion of the corporation’s assets, or it is the profits equal to the exact stock that you own. I know someone is already asking, what is shares? Your shares are the unit of your stock. I hope we are making progress?
Good! Let’s keep moving. When the company’s capital is divided into small units of a finite number, each unit of the division is known as share, and an investor who owns a share in a company are known as shareholders. So, this is to tell you that stock has a more expanded meaning than share. Share is explicitly referring to the ownership of a particular company. When you buy a stock in a company, you are purchasing a fraction of that company. Now let’s go forward!
How does the stock market work?
The thought of investing in the stock market alone is scary to so many of you, and you are not alone on this page; after all, no one likes to lose money; we all want to make a profit. But I will like you to remove those terrified and horrible stories you might have come across about investing in the stock market.
The truth of the whole talk is Investing in the stock market has its own risk, but people still make it. Do you know why? It is because they approached the stock market with the right mindset and with an appropriate strategy. Look at those who are strikingly rich. They are rich because they invested in stocks.
The stock market works by allowing buyers and sellers to have a price negotiation, and the market enables trading to take place. This is to say that, as an investor, you can buy and sell a stock. The stock market also helps to control the exchanges being carried out in the market, and this is to ensure not only an equal environment for the investors but also to make the market conducive for the corporation whose stock is being traded in the market. You can rest assured while trading in the stock market because it is a safe and regulated place.
Before discussing the right time for you to buy a stock, which is the specific topic of conversation, it is essential you know why some companies issue shares. You shouldn’t just go ahead and buy shares in a company. It would be best if you had a piece of immense knowledge about the company and why they are issuing shares.
Why does a company issue shares?
Some companies issue shares to raise capital, especially if it is a start-up company. But I will not advise you to buy stock in a small company. This is simply because you are not sure if it will hit a success. It is best to make an investment in big companies with a promising future.
An already established company can also choose to issue shares if they want to undertake a new project.
An already established company may need access to a more considerable amount of capital to grow its business. Such companies gain more capital by selling shares to the public through an initial public offering, commonly known as IPO. The effect of this is that the company automatically becomes a public traded company whose shares are held by numerous members. Now, let’s discuss the right time to buy stock in 2021.
The right time to buy stock in 2021:
You shouldn’t buy a stock because people are doing so. It isn’t right to do as an investor. Successful investors don’t do that. When it comes to investment, your opinion and idea are what matters. What Mr. A wants will be different from what Mr. B wants. So, as an investor, what you want is different from what I also wish to have. People are not you, neither are you people, the earlier you understand that, the better.
You can choose to buy into cooperation because you believe no matter what happens, they will do well. You shouldn’t buy a stock because people tell you the stock market is going up or down; that is not how it should work. There are crucial questions you need to ask yourself before buying stock. Let’s go into those questions. By asking yourself these questions, it will allow you to do your research, and in this blog, I am only giving my ideas and opinion.
For you to be ready to invest in a company, it means you must have carried out well-detailed research about that particular company. Don’t go about investing in a company you are yet to check its background information. So many disadvantages come from investing in a company without doing the appropriate research. Investing in a stock doesn’t mean magic will happen over the night, and you will become rich. When you invest in a stock, you should picture the company about what will occur in approximately 5 years to come.
It would help if you were specific and definite that the company’s revenue would increase in 5 years to come; you shouldn’t be in doubt about decisions like this. If you feel like you are not sure, it is not a time to buy stock, please. If you ask me how many percent sure one should be before purchasing stock, you need to be 99% accurate. This is why you do not invest in a company that is not undergoing any growth or development. It would be best if you have a high level of understanding of where you will buy stock. Do your research.
Do you understand valuation?
Valuation is paramount! Valuation is the process through which you determine the current or the projected worth of a company. When you check out the market value of a company asset, what you are doing is valuation. When you check out the prospect of the company’s future earnings, you are doing what is called valuation. If you picture a company not going to grow revenue, don’t even bother being in that company. Say no to a company with shrinking revenue; it is not a buy.
Are you in a position of power?
Can you answer this question, or you are at a crossroads with this question? Oh! You may likely don’t even know what it means to be in a position of power. Anyway, that’s why I am here for you. Being in a place of power implies if you will be buying stock in that particular company of your choice, do you have some extra money saved up somewhere in case of emergency? Refuse to be in a position of weakness, and investment is not to hold you down or prevent you from answering to emergencies when they come knocking.
You need to have money around, and please note this down; it is a vital point. If you are in a position of weakness, you may end up selling your stock at a terrible price. Does that bring in any gain for you? No! To invest, you hope that there will be returns more significant than what you originally put in. But, if you don’t have enough money saved up for yourself as a backup, you will not make your profit. A particular situation may push you to sell at a significantly reduced price.
Please, it will be best if you never put yourself in a position of weakness. You should only buy a stock when you are in a great power position because you will be in complete control of your stock.
Buying a stock before the big fund managers in Wall Street?
You should try as much as possible to invest in potential stock before the big fund managers in Wall Street see it, if you have the right evaluation on your table. Yes, you can have a significant advantage over them. Fund managers in Wall Street are more interested in maintaining their relationships with people who have a lot of money. And most times, they don’t even see what is coming; they only see what is in front of their face; they are always late to the game because they don’t know what is happening, sometimes the stock would have Increased in price before they even realize it. Like Tesla stock, Wall Street was late to discover it, and it was as if they did not see it.
In making your investment decisions, don’t always depend on them because you may recognize trends faster than they do. The company I spotted recently is Tattooed Chef Corporation; it is a company that I have been looking into buying their stocks. The company has a tremendous growth rate in the food industry. Now, what I am trying to say exactly is that Wall Street is yet to recognize this; maybe in a couple of years to come, they will. It would be of interest to you to check out my video “Is tattooed chef worth it?”. The reasons you should buy the company stock was discussed in the video.
If you understand it, you should be able to explain it
The best way for you to place your judgment on your understanding of the stock market is to conveniently explain to someone who is not even an investor in the stock market, and the person should not know about investment. If they should comprehend the explanation, it means you know what you are doing. There is something known as a bull thesis; things like this, you should break it down for people to understand.
Keep in mind; it is impossible to pour from an empty cup. It is what you have in you that you will dish out! You are reading this blog now, and you can testify that most of your friends don’t have adequate knowledge about investment. They do not even invest in the stock market.
When stocks go down, what happens?
Don’t deceive yourself; stocks sometimes go down even if your investment is in a big company. When stocks go down, it is a massive opportunity for you to buy more shares for cheaper. I deal with an odd number. I buy more when the stock is down by 3%, 5%, 8%, 10%, or even when it gets heavier. All that matters is if you have trust in the company that the prospect will grow in the future.
When you have a double mind about an investment, you should not bother putting your money into it. Do you feel comfortable putting your savings into it? If you don’t, don’t worry, it is not the right time to buy stock. It would be best if you manage your risk by taking the right step.
Whatever you put into your investment is what your return will be. Do not allow anyone to pronounce any negativities into your mentality. You are all that matters. It is all up to you.
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Recommended books for further reading:
- Finding My Virginity – Richard Branson
- The Miracle Morning: The 6 Habits That Will Transform Your Life Before 8AM
- Atomic Habits: The life-changing
- The 7 Habits of Highly Effective People
- 24 Assets – Daniel Priestley
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