The Motley Fool

If a FTSE 100 bull market has begun, is now a good time to buy shares?

Image source: Getty Images.

Has the FTSE 100 turned bullish? On March 23, the FTSE 100 crashed to a low of 4,922.76. On Tuesday this week, the index closed at 5,958.5, a 20% rise from the March low. On Wednesday the index closed above 6,000. It is generally accepted that a 20% decline from a high distinguishes a bear market from a correction. Likewise, a 20% rise from a low turns a mere rally into an official bull market. The FTSE 100 is now in bull market territory.

How long will the FTSE 100 bull run?

Bear markets end bull markets. According to investment bank Goldman Sachs a bear market usually removes 68% of the gains made in the previous bull market. The recent decline in the FTSE 100 was around 55%. If that was the extent of the bear market, then it was relatively mild. Moreover, it was one of the shortest on record.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

That is surprising given the declines in GDP and employment reported already. Economic activity is starting to pick up in some places, but normality looks way off. GDP forecasts still look bleak. Looking at recent corporate news, we can see bank profits are being crushed and airlines are laying off staff (some are close to bankruptcy).

What I am getting at is that if this new bull market were to run on, it would be unusual. So while the FTSE 100 has met the criteria for entering a bull market, I would not rule out a prolonged period of flat trading or another pullback.

Bull or bear investing

I don’t think investors should waste time worrying about whether this bull market will run on for years, or hit another bump in the road. Time in the market is more important than timing the market. Trying to invest only at the start of long-running bull markets, or trying to sell before a bear market and not invest during one, are examples of trying to time the market.

Unless an investor is exceptionally gifted, what usually happens when trying to time the market is that stocks get sold during bear markets at a loss, and not rebought until markets have gone up a lot, missing a lot of gains. Investors will usually do better by investing regularly, no matter the state of the markets.

Investors are happy to buy stocks when markets are rising; it seems odd to avoid buying them on the cheap as prices are falling. Carrying on investing when markets are falling lowers the average cost of purchases made in the preceding bull market. Investors get more shares for their money when prices are lower. Far from being disasters, a long-term and regular investor should view bear markets as opportunities.

Maybe the FTSE 100 will continue to rise, and perhaps it will not. One thing I am confident about is that investing in a bunch of quality stocks or an index fund regularly and holding for the long term is usually a better plan for building wealth than trying to time the markets. 

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.