Choosing the Right Time to Purchase a Stock

Remember "buy low and sell high"? It's not as easy as many imagine. These days choosing the right time to buy a stock requires a bit of research and investigation. First, one must analyze the company making the stock available (you can check out resources such as Google Finance, Yahoo! Finance, CNN Money, etc.) Things to look out for are the company's history, it's growth and price-earning ratio (also known as P/E ratio) - make sure to examine a company's revenue and profit margin from public filings, as well as any potential prospects of growth in the future. Upon buying shares, one suggestion is to purchase shares in batches - if you have confidence in the company but the price keeps declining, buy more. However, other's suggest that if it continues to drop and you have lost 10 per cent of the value, swallow your losses and pull out. Many believe that unless a company is in serious decline, it is worth the wait to hold onto a stock for the long-term even though one might get a substantial profit by buying stocks before their earning, however one might lose quite a bit of money if the report is not great. Finally, be sure to keep a good eye on your money and watch how the market reacts, paying close attention to market indexes such as the Down Jones Index and S&P 500.