Why Now Is The Right Time To Buy

With just a few more weeks to go before the end of the year, perhaps there’s still time for a good old Christmas rally to see off 2013 in fine style.

I mean, what with the S&P 500 setting new all-time highs across the pond… climbing non-stop to 1,800 and beyond… surely it must be a matter of time before that American enthusiasm finds its way over here.

True, we may not see FTSE 7,000 – or a Fool office conga – before 2014. But I will still take a 13% index gain this year, next year, the year after…and every year after that!

He’s given up fighting QE and now says “you have got to be in things that are trending”

Seems a long time ago now, but 2013 actually kicked off with the FTSE blasting through 6,000… and it has stayed above 6,000 ever since.

In fact, not even during the peak years of 2000 and 2007 could the FTSE manage to hold above 6,000 for the entire 12 months… suggesting 2013 has laid a much stronger platform for that next attempt on 7,000.

And looking ahead, there remain very good reasons why now remains the right time to buy. Not least…

  • Buffett is not fearful: After plonking $3bn-plus into Exxon Mobil the other week, the billionaire investor has since claimed stocks in general trade in “a zone of reasonableness”.

“They’re definitely not way overpriced. They’re definitely not underpriced.” said the master stock-picker on CNBC.

Translated: You can still find decent shares to buy (keep dancing).

  • Vodafone’s bumper dividend: Savvy Vodafone shareholders will collect their share of the group’s mega £54bn hand-out jackpot during the first three months of 2014.

That £54bn is enough to buy ITV, J Sainsbury, Standard Life, Legal & General and Centrica combined

…and surely most of that money will find its way into big-name shares and push prices much higher. You may want to load up on your favourite blue chips beforehand.

  • Smart bears turning bullish: Prominent hedge-fund manager Hugh Hendry has become the latest bear to throw in the towel.

According to Investment Week, Mr Hendry has admitted:

“I can no longer say I am bearish… I cannot look at myself in the mirror; everything I have believed in I have had to reject.”

Basically he’s given up fighting QE and now says “you have got to be in things that are trending”. Better late than never I guess.

Just so you know, Mr Hendry has made some smart decisions before. He was buying gold at decade-low prices during 2000, and during 2008 – when the FTSE collapsed 30% during the banking crash – he scored a 31% positive return.

(Just imagine the returns he could make now that he’s bullish on this rising market!)

Not even our experts at Motley Fool Share Advisor can predict what could actually happen

I’ve said before that markets never go up in a straight line.

For all you, me, Mr Buffett and Mr Hendry know, next year could see the FTSE plunge below 6,000 all the way towards 5,000 or even lower.

You never know… Maybe the QE printing presses will be turned off. Or maybe the government’s support for house prices will cease.

Then again, maybe the eurozone will hit trouble. And maybe our economy will take a nosedive. Maybe gas bills will rise yet another 10%. Maybe there will actually be a FINANCIAL APOCALYPSE.

Or maybe England will be whitewashed 5-0 in the Ashes.

Or maybe something else awful could occur that nobody has foreseen. Maybe, maybe, maybe…

Nobody – not even our experts at Motley Fool Share Advisor – can predict what could actually happen next year. All we can do as ordinary investors of course is to stick to tried and tested investing principles… not least buying good companies at attractive prices and letting the underlying businesses do the talking.

My biggest winner this year is up a staggering 142%

Who could have thought such dull activities as food wholesaling, cleaning uniforms and making orange squash would become major wealth-builders in the bull-run market of 2013? Not me.

Yet check out these mid-cap winners from the year to date…

  • Booker – shares up 63% after results showed earnings up 17%
  • Berendsen – shares up 54% after results showed earnings up 21%
  • Britvic – shares up 53% after results showed earnings up 28%

Sadly none of those shares made into my portfolio at the start of 2013…

(I bet only the very smartest of share experts could have located those particular bargains in such lower-risk sectors).

But don’t worry, my own ISA and SIPP and dealing account have been racking up the gains this year…

…with my biggest winner up a staggering 142% and my next best up an amazing 94%. I have to say, I am pretty pleased.

Foolish final thought

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> Maynard does not own any share mentioned in this article. Motley Fool Share Advisor has recommended shares in Booker and Britvic.