Stonefolio
Investor's guide

When to buy stocks: what the research actually says

The honest summary of sixty years of research: nobody times the bottom — professionals included. But "you can't time it" does not mean "timing doesn't matter". Four things do come out of the data:

Buy reasonable, not necessarily cheap

Buying below a company's own historical valuation earned more on average; waiting for "truly cheap" cost more return than it saved (time in the market beats timing the market).

Don't fight the trend

Buying while the price sits above its 200-day average historically delivered similar returns with smaller drawdowns (Faber 2007).

Stagger your entries

Entering in parts (say three tranches over three months) removes the emotion and the bad luck of a single moment.

Size small what moves wildly

Scaling positions to volatility historically improved return per unit of risk (Moreira & Muir 2017).

And the biggest documented trap: buying at peak attention. Stocks suddenly in the news everywhere went on to lag on average (Barber & Odean 2008).

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