How to Know When is the Right Time to Buy Shares of Stock

Timing is a major part of buying and selling stocks,

The stock market holds great possibilities for investment. Investing is high risk, however, and should only be done if you can live with the loss. Buying at the right time is an art and a science, and takes investment knowledge and skill.

Difficulty:

Challenging

Instructions

Things You'll Need

• Stock broker or brokerage account
• Access to financial market news
• Money

1. Establish a brokerage account or hire a stock broker. Many companies allow for online accounts. Some companies have options for a personal broker. Take the time to find the investment firm that is right for you. Differences include fees, investment information access and personal service.

2. Deposit funds into your accounts. These funds will be used to buy the stock. The brokerage firm will hold these funds, often in a money market interest bearing account, until you use the money for a trade. Money in these accounts are rarely covered by FDIC insurance. Know the risks involved.

3. Research the markets, companies and trends The key to investment success is information and knowledge. There is little "luck" involved. Read publications such as "The Wall Street Journal" and "Bloomberg BusinessWeek." Online sources such as Google Finance, Yahoo Finance, the Motley Fool and Bloomberg are valuable for to the minute research. Pay services are available as well.

4. Find a stock that is undervalued. Many complex formulas are available that can help you determine the intrinsic value of a stock. If you find a stock that is comfortably lower than the value, buy it, as the stock will likely rise to the intrinsic value. Do not buy a company because you like it; buy it because it is a good value. Remember, a high price in dollars does not mean a high price. Value is different for each stock.

5. Keep track. If the intrinsic value drops below the share price, sell. It is important to keep track of your investments The stock market is a good investment in the long term, but is very risky in the short term. In the long run, stocks will trend upward.

Tips & Warnings

• Find a trusted source for information. This will help you manage your investment decisions.

• If you are unsure, it is often best to pay an adviser to assist in stock purchases.

• Investing has risks, and understand them before you put your money in.

• A "tip" is often illegal. Insider trading is a crime.

References

• MSN: Motley Crew; New Investor Center; When's the right time to invest?

Resources

• Google Finance
• The Wall Street Journal
• Yahoo! Finance
• Bloomberg