The effect of time on the stock market

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As an investor, you can not underestimate the effect of time on the stock market. Time is one of the most important factors you need to consider. The time factor generally differ depending on whether you are a short term investor or a long term investor.

More specifically, time is important because it:

• helps to make the decision to buy or sell stocks.
• has the healing power.

The decision to buy or sell stocks

We are aware of how difficult it is to time the stock market. Regardless of that, you still need to consider the time factor before investing. The profitability of your portfolio of stocks heavily depends on this. Two investors may be holding the same number of shares from one company but their returns will vary greatly depending on the time they bought their shares.

In addition, good stocks if purchased or sold at a wrong time can be as worse as a bad investment. The following are important questions to consider:

• Stock A is a good investment but is it a good time to buy it?
• Stock B is a bad investment but is it a good time to sell it?

Furthermore, it is very important to have a watch list of good stocks that you should track more often. It may not be viable to buy the stocks now because maybe their prices are too high or maybe you do not have enough money to purchase them. The key strategy will be to sell the stocks in your portfolio that are not performing well when their prices go up and buy the stocks on your watch list that have dropped in prices.

Important article: Buying and selling stocks.

The time factor can also help you to select the stocks you need to buy. How does this work? There are some stocks that are heavily dependent on seasonal demand of the products that are produced by the companies. If you are to invest in these companies, it may be wiser to buy their shares during the off-season time. There is a higher chance that their share prices will be lower than during the peak-season.

The healing power of time on the stock market

Time is the most important investment you have as a value investor. As most us know, the Coronavirus pandemic caused the stock market to crash, time is the key to avoid the panic. Time will heal the wounds of lost investments. Despite the severity of the stock market crash, we can have confidence in knowing that there are good times ahead waiting to reward the patient investors.

I don’t know what the future holds or when things will get better but my hope is in the knowledge that all things will be fine. Time will heal the bleeding wounds.

With that in mind, it is good to ensure that you buy and hold good stocks as much as you can. In the midst of uncertainty like the one we are currently in due to Coronavirus pandemic, it is very important to know that things will get better and the stock market will bounce back. Remember the loss on your portfolio is only real when you panic sell but if you hold on, time can convert that into gains.

Important articles:

• Few tips on how to buy stocks during the stock market crash.
• The investor’s dilemma during the Coronavirus pandemic – Explaining the Average Down Strategy.

Moreover, the power of time can make an investor more relaxed about trying to time the market. When you are investing for the long term, time is always on your side for the stock market to correct itself. Therefore you can buy good stocks any time knowing that if it is truly a good stock, its price will eventually rise.

Summary points

It is important to know that time is one of the greatest weapon in the investor’s arsenal. It has the healing power and it affects the profitability of an investor’s portfolio. Therefore, the effect of time on the stock market is very crucial to consider.