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When To Buy Stocks








Stocks should be bought when they are cheap. By being cheap, we mean
that the market price is much less than the intrinsic value. In Chapters
X. to XV. we talk about influences that affect the price movements of
stocks. By studying these carefully you should be able to decide when
stocks generally are cheap. Of course, not all stocks are cheap at the
same time, but the majority of listed stocks do go up and down at the
same time, as a rule.

At the time of this writing (in the early part of April, 1922) there are
a great many stocks listed on the New York Stock Exchange that are
selling at prices much less than their intrinsic values, but there are
some stocks that should not be bought now, nor at any other time. There
are some stocks listed on the New York Stock Exchange now that perhaps
have no intrinsic value and never will have any. Nevertheless we
consider that right now is one of the times for buying stocks. There
are unusual bargains to be had, although keen discrimination is
necessary in order to be able to pick out the bargains.

As a usual thing, it is a good time to buy stocks when nearly everybody
wants to sell them. When general business conditions are bad, trading on
the stock exchanges very light, and everybody you meet appears to be
pessimistic, then we advise you to look for bargains in stocks. The last
six months of 1921 was an unusually good time for buying stocks.

It is well known that the large interests accumulate stocks at such
times. They buy only when the stocks are offered at a low price and try
not to buy enough at any one time to give an appearance of activity in
the market, but they buy continually when the market is very dull. It
seems to be characteristic of human nature to think that business
conditions are going to continue just as they are. When business is bad,
nearly everybody thinks business will be bad for a long time, and when
business is good, nearly everybody thinks business will be good almost
indefinitely. As a matter of fact, conditions are always changing. It
never is possible for either extremely good times nor for extremely bad
times to continue indefinitely.

You can buy stocks cheaper when there is very little demand for them,
and you should arrange your affairs so as to be prepared to buy at such
times.





Next: When Not To Buy Stocks

Previous: What Stocks Not To Buy



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