Now Is The Time To Buy On The Dips

I use iii sharebuilder which costs £1.50 to buys on the 23rd of each month. It is annoying seeing shares i had ordered to buy last week shooting up in price this week. Too bad the negative sentiment didnt last till monday and today

I recovered losses today, but it's too early to celebrate. The markets could go into free fall again and never recover... But we take the risks so we can be sure we're still alive...

I think that may have been a temporary rise as the FTSE is heading south again today. I am breathing a big sigh of relief as I wasnt able to participate until the end of this week and thought I had missed it.

"I'm certainly not. I've been feeding in one-off sums of £1,000, or £2,000, whenever markets dip a little lower."

Well, then you're timing the market!

@jf2007 - I too use the £1.5 sharebuilder from iii.co.uk. When they had 2 sharebuilder dates per calendar month, it was much easier to time your purchases and keep trading costs down.
More than trying to time the market, I need to time the £10 vs £1.5 for small sums invested.

UncleEbenezer. Luckily the market came to my rescue this morning!

Harvey Jones

As a young man, I was taught that the surest way to lose money was on slow horses and fast women! To that I would now add forecasting the bottom of the market particularly in these very volatile times If you can do that with any degree of certainty, and I don't know anyone who can, you should be a multi-millionaire by now.

We only have TA methods to give an estimate of how far the FTSE100 will fall. Using Point & Figure, there is a bullish support line at 5,100. If it breaks below that, which is a sell signal, a vertical count estimate says it may go down to 3,500, as it did in 2003 and 2009. Buyers at 5,300 will look pretty silly if it gets down to 3,500!

Another TA estimate is to note that if the FTSE drops below 5,000 it will complete a Head and Shoulders pattern with a peak at 6,000 and a neckline at 5,000. the prediction then is that it will fall to about 4,000.

We may see the last couple of days as what I think used to be called a sucker rally that draws investors back in before the market plunges down again. All the shares I owned have broken below their P&F stop losses and been sold automatically by my broker. I am now moving cash into savings accounts. I highly recommend stop losses.

Another good guide is the Sell in May, buy back on St Swithun's Day one. This has done remarkably well over the last ten years and more and seems to be working this year too.

I use Sippdeal's Regular Investment for their £1.50 trading fee as my purchases are pretty low value. That trades on the 10th of the month. That does make it much more difficult to buy at the dips though, so I don't bother trying - just buy then.

It is the unforeseen events that cause the biggest shocks normally. Heaven only knows what would happen to The London Stock Market if Greece leaves the EU. Such an event could well precipitate a domino effect, and market meltdown, also involving, inter alia, Spain, Portugal and Ireland and many other major markets worldwide. We would be in uncharted territory then and graphs serve little practical purpose when prices are in free-fall. It's all too awful to contemplate but I do remember what happened in 1973 and I haven't forgotten the hard lessons I learnt then.. In those sort of situations, reverse gearing and margin calls can have a devastating effect not just domestically but throughout the financial world. So as an OAP, I suppose I'm more risk averse now and it would be of no comfort to know that we are no where near the top of the market if a large percentage had already been wiped off the value of ones savings. If you're young enough, and not leveraged, you have a longer time horizon, and can sit tight, and good quality shares will probably recover in due course but it may be a bumpy ride along the way..

WRT the market falling to 3500: will people make the same mistake again and sell off wholesale - after all 2008/9 is still in the collective memory?
Also have large amounts of shares been sold off already, limiting the fall?
eg Pension funds going to bonds.

Oh, we've seen it all before!!

I predict it will only fall as far as 3510!

AmsterdamGroove It depends how long term you are, what return you will accept and how much paper loss you can stand. It would take a full article to cover all the points but a quick answer would be to look at the FTSE100 price history from the beginning of 1998 to now, the last 14 years, roughly. In 1998 the FTSE was at 5200. Since then it has been up to 7000 in 2000, down to 3500 in 2003, back up to 6800 in 2007, down to 3500 in 2009 and now back up to 5266, roughly where it was in 1998. So, with a tracker, your capital gain would have been nil. You could have made about 3.5% from dividends but lost most or all of that to inflation, fees and tracking error. meanwhile your money has been repeatedly halving and doubling and at risk and you have made nothing in 14 years. Your wife will have asked why you didn't sell when it was high and buy in again when it was low, when are you going to make any money and what's it all for! That's the good outcome.

If you have bought stocks for higher dividends then unlike indices that basically always recover, stocks can and sometimes do, go down and stay down or go to zero. Look at GEC after Weinstock. Simpson killed a brilliant company in a few years. For a modern one look at Man Group (EMG). It was 700 in 2007 and is 73 today and falling. RBS was 250 in 1998 has been 600 in 2007 and is 21 today.

What's that old C&W song? Know when to hold 'em, know when to fold 'em, know when to walk away, know when to run.

TA? That has about as much relevance as the position of the moon.
However, I am glad that some (other) people use it, as every buyer needs a seller.

DashingDave123 thanks for your comment. I am new to this world of investing and yes, your comment is food for thought... I just cannot reconcile this with one of TMF's most loved from Buffet -- "the ideal holding period is forever"
Well, selling now at a loss to buy it later when the market dips, guess that would be trying to time the market. This is something I simply cannot do. Perhaps I will regret it pretty soon...

Hi globally,
"As a young man, I was taught that the surest way to lose money was on slow horses and fast women."

Farmers used to say that, of the ways of losing money, backing horses is the quickest, wine and women the pleasantest and fattening beef cattle the surest.

Of course that was before they got around to antibiotics, feedlots and imported soya.

I'm completely new to shares full stop, been reading a bit this last year or so and took a punt (gamble) as that is what I think this is all about with some spare cash. I think I've bought OK (BP, Aviva, Astra Zenca, Vodafone, Tesco, BAE, British Land, Lloyds TSB, HSBC, GSK). I've invested approx. £4000 over the year and am down about £900 BUT I haven't sold a single share as I'm waiting for 10 years ish... With any new cash I find I'll be buying more of the same (except Lloyds). I only wish I had more cash to gamble as that way you make more. I use Halifax share dealing which is expensive as it costs £14 a buy, so I try to buy at least £300 each time to minimise % losses. Unfortunately I don't have enough cash to buy more, but what I've decided to do is forget rise and fall of prices over a few months/year and just try to buy when I can afford it and hope for the best ( a great plan I know ;) ). My long term plan is to buy a few grand each of the above shares. The only other shares I've ever bought were £900 Dragon Oil shares years ago which I've made about £4000 on so know it's a long term thing.