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Sunday, July 18, 2010

Finance Figured-Guidance for investors for when to invest in stock markets?

The right time[(EGSPSM9DWT9M)] to enter into a stock market to invest,both by veterans and novices alike, has been a big tussle for them, more so when there is a constant tussle between the bulls and bears in any year, to rule the market.So, for an average small time investors,time to enter into the market itself is a big speculation.



This difficulty can be, to an extent made easy by always buying at low and selling at high.(The Right Price...)The most common mistake small time investors make is to go along with the market, that is buying when the market is in a bull phase, trying to cash in, on the run.By doing so they only end up holding the stock, bought in bull run,and seeing that stock's price go down when market swings in the other direction. Small investors should never buy in a heated market.
So, you may ask, when is the time to buy a stock? The best policy is buy at low,or average at dips.
Will it not be useful if one can gauge which days in a month will be the best time to invest.So to help small time investors to zero in on the days, when the market is going to be at its lowest, one agency has attempted and analyzed the data for the past 25 years and have arrived at some findings, which the small investor can
use, after careful study and a bit of his own analyses.
The findings are:
1)The first five days of a month has been the lowest, for one-third of the duration of the research period.They aver that these are the best times, in a month, for a investor to invest in a market.
2) The last five days of a month are also the best time to enter the market,as their analysis's has revealed that these days have been the lowest for nearly 27% times of the duration of the analyzed period.
3)10th to 15th of the month have been only lowest for 8% of time during the analysis's period.
4)In terms of returns, the second half of any year has given higher returns than the first half,(60% and 40%).So investing in the first half is better to reap good returns, when the market goes up in the second half of the year.
5)The third quarter of the year has outperformed the other quarters.Quarter4, which is the beginning of the year, has not performed well,Which goes on to prove that the second half of the year is better in terms of returns.
So, their conclusion is to invest in the first three months of the year.
Raghu Natrajan.