The 5 Worst Times to Buy a Stock

What is the fuss?

There are many frameworks for selecting stocks. Then, there is the wise saying from the late investor veteran, Mr Charlie Munger, about the power of inversion. Or, as he used to say: “All I want to know is where I’m going to die, so I’ll never go there.”

If, in investing, you know for sure that your decision will make a loss, then those are the decisions you need to avoid.

We spend a lot of time identifying the moats of a company, its financial history, future growth levers, management strength, etc. But, what is more important is to know when to buy and when not, even for a fundamentally strong stock.

In this edition, I lay down five situations that are the worst times to buy a stock, even if that stock represents a well-run company with strong moats.

But isn’t a good company to be held forever? Yes, but when bought at the right price.

If one forgets the golden rule of ‘Margin of Safety’, and buy growth at any price, time will not be kind to these investors.

As I have personally experienced losing money or waiting too long to make meagre profits, these five situations are far from ideal for buying into stocks.