No matter how many times I tell myself thata stock market crash is the perfecttime to buy shares, I still struggle to screw up the necessary courage. Its human nature to want to flee a disaster zone, rather than marchboldly towards it. Butnows the time to get tough on yourself. Todays a good time to buy shares. Tomorrow may be even better.
To buy or not to buy?
As I write this, global stock markets have stabilised. The FTSE 100 has just crept over the 6,000 barrier. Thatstill leaves it more than 15% below its all-time-high of just over 7,100, achieved in April last year. So despite recent stabilisation, a great buying opportunity is still there.
You may get an even better one shortly, ifChristian Mueller-Glissmann at Goldman Sachs is correct. He has warned that the China-fuelled global stock market meltdown is likely to get worse, and if it does, that will be the time to buy equities. Recent drops have help by reducing company valuations, giving investors a buffer, and of course greater scope for recovery.
Time to go shopping
Mueller-Glissmann may beright. But he may be wrong. Even Goldman Sachs cant see the future. Only God can do that, and hes too busy tooffer stocktips. Share pricescould fall further, or they could surprise everybody and recover. Or they could do both. Markets never move in a straight line.
All we know for sure is that today, shares are cheaper than they were. Think of it as the January sales. Store clearance salestrigger a rush of buyers looking for a bargain, whilethe opposite happens in stock markets. People see listed companies selling at fat discounts and respond by closingtheir wallets. Traditional shopper psychology is completely reversed, with people only starting to shop again after prices have risen.
Top tips
There are bargains galore right nowif you canscrew up your courage. LloydsBanking Group, for example, isdown 20% in the last six months, yet I see thisas a tempting buyfor long-term dividend investors. Barclays is down nearly 30% over the same period. Tempted?
Not every share price plunge is a buying opportunity. Personally, I would steer clear of mining giants Anglo American, BHP Billiton and Rio Tinto,as the commodity sectoris vulnerable to further falls. Braver investors may see this as a once-in-a-lifetime investment opportunity instead. At todays rockbottom valuations, they may have a point.
You may prefer a company that has thrived inthe market rout, such as dividend heroesBritish American Tobacco(up 3% in the last month), engineering giant BAE Systems (up 6%) and National Grid (up 4%).By standing aloof from the current meltdown, theyve shown their resilience.
If you can keep your head while all about are losing theirs, youll be buying shares today. You may also be keeping some ammunition dry, to buy more ifmarkets fallfurther.
There are some amazing share-buying opportunities out there, and here is one of our favourites.
This mid-cap company has been putting on the style lately and one of the Motley Fool’s top analysts reckons it’s the latest British brand with the potential to go global.
To find out its name all you need do is download our BRAND NEW report A Top Growth Share From The Motley Fool.
Click here to read this no obligation report. It will be yours in moments and won’t cost you a single penny.
Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.