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The time to invest in the share market in Australia is during periods of recession, mass selling of stocks due to panic and fear and when nobody is buying. This is when you can purchase company stocks and shares below their intrinsic value or real value. This way, you will get a big discount on the cheap shares when the prices go down during the bear run. Warren Buffett, the world's greatest investor, once said this, "Buy when others fear and sell when others are greedy". There is a formula to calculate the intrinsic value of the company shares which you can read in financial books. It is important to know this formula so that you know when to sell and when to hold on to your shares. When there is a bull run, you need to hold on to your shares to make the maximum profit by knowing the intrinsic value so that when you sell, it will be the time just before the marginally sharp drop in the share prices.
Warren Buffett - The World's Greatest Investor
Warren Buffett is now the second richest man in the world and he made all his money through investment. As a teenager, while his classmates are crazy over comics, young Warren was already reading company reports. He started investing quite young and the money compounded from the first $100,000 to billions today after 50 years. The returns from buying shares are in the range of 7% to 25% or even more. This is much more than putting your money in the fixed deposits in the banks with very slow returns. Generally, the value of shares will increase as the population grows and there is a need for more material. Thus, over the years, as you keep your share and not speculate, you will make a handsome profit from it. This takes at least 5 - 10 years to see the profit.
Never Speculate in the Stock Market
Time and again you hear of stories of people being burnt in the stock market as they speculate and get influenced by their friends. They lack the financial information like how to tabulate the intrinsic value of the stocks, calculate earnings per share, returns and so on. Hence to be a smart investor, you need to equip yourself with relevant financial information by reading up financial books before investing your life savings in the stock market.
George Pettit is a broker and real estate agent. He writes for several important magazines about topics such as business, finance, invest share market and several other topics which attract attention of many readers.
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