Is it a good time now to invest in the stock market?
Posted by xzhang on June 26, 2009
It has been a long time since the stock market fell from the roof and the economy stays in a bad shape. From time to time, my friend will ask me the same question : ” Is it a good time now to buy stock”. My answer is always simple, it depends on your personal strategy, risk tolerance and time frame.
If the purpose is speculation, I won’t say anything about it. However if it is for long term investment like 401k, I will say yes to that question. Why? Basic rule of market is so-called “random walk”, it never makes sense to guess how the market will behave tomorrow. So the best way to handle that is to do right asset allocation according to your age, risk tolerance and time frame, then implement dollar cost averaging. After the automatic contribution is set up, you just relax and forget it and waiting for retirement.
Remember, since we dont’ know what will happen tomorrow and we do expect in the future the economy will be better, it is always good time to invest into a PORTFOLIO (not individual stock or bond) unless people have no faith in the future.
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