Ace investor Sir John Templeton once said that the best time to buy shares is when we have money. He also thought it was best to buy when investor sentiment is low.
All he really meant by the first one is that it’s always a good time to buy shares. If we have money, get it in the market, and don’t waste opportunities trying to get the timing right.
But it can be a nice bonus if we stumble upon some good timing too, can’t it?
Investor survey
Judging by the latest Investor Index, now might just be one of these extra special times.
The survey looked at 1,100 UK investors who have at least £10,000 invested. And it found investor confidence has reached its highest level since the pandemic.
That’s despite high inflation, which just shocked us by coming in as high as 8.7% in May.
As part of the shift in sentiment, an increasing number of investors are turning to do-it-yourself research. I find that very pleasing. And it’s very much in line with what we’ve been saying at The Motley Fool for years.
The Buffett way
It fits in with what experts like Warren Buffett, boss of Berkshire Hathaway, have said all their lives too. We should do our own research, learn about and understand the companies we want to buy. And then hold them for the long term.
Buffett has made average annual returns of 20% a year since he took over the investing firm back in 1965. So he should know what he’s talking about.
Speaking of which, it seems that 60% of investors think that investing for the long term is now more important than ever.
Against that though comes the disappointing finding that 31% of younger investors have their eyes on short-term returns.
Ignore headlines
I suppose that’s to be expected really, and I started out thinking the same way. I think it’s only natural, as finance headlines shout about the big gains and losses of short-term market timing.
Making a steady 5%-10% a year, maybe from boring bank stock dividends, isn’t the kind of thing that sells the news.
It took me a few years, and a few losses, before I realised how pointless it was trying to time the market. I just don’t have the skills to do it reliably. And in all my years, I’ve never met anyone else who can do it either.
Short-term trading can cost a lot extra in fees too. I reckon it’s far better to pay one charge to buy, and then another when I sell several decades later.
Buy shares now?
So I say it’s time to buy shares now. That’s mainly because I believe it’s always a good time. As Sir John says, having the money is all I need.
But these findings give me optimism that the current generation of new investors have their heads screwed on a lot better than I did when I was young.
And improving sentiment could mean a return to a bullish stock market.
