When market volatility occurs, it can certainly spook investors. In this music video from “The Morning Show” on Motley Fool live, recorded on February 15Fool.com analysts Tim Beyers and Sanmeet Deo, along with director of small cap research Bill Mann, share some tips on how to invest even when the market is quite erratic.
Tim Beyer: The way I handle it, I’ll just say this for myself. I have always believed and will always want to be a net buyer of stocks in all markets. I don’t want to try to call when a market is overheated or undercooked or whatever. When I think I’m paying too much for storytelling then I position the size and then buy a little. When I think I’m getting a bonus story, I pay more, buy more. That’s how I do. It’s not that I stop buying, I just buy less when I feel like I’m paying too much. When I feel like I’m getting bonuses, like I feel like they don’t give enough credit for the optionality here, that’s when I buy more. That’s it. I am not trying to make things more complicated than this bill.
Sanmeet Deo: There’s also, I think I learned that when I was a member of The Motley Fool also like buying into third parties. If you decide, okay, I like this business, I want to put ten grand or something into the business. That’s what I can invest. Do not put all of a sudden. Because the markets are very volatile right now too. You can almost expect to invest some money and the stock may well go down.
You know what, you can’t time you can’t control this, you can’t blame yourself because you’re just not going to be able to, as Peter Lynch so elegantly put it, you’re just not won’t be able to call that. But if you deploy a third party, say, and you’re comfortable with your analysis of your investment. See how the company is doing.
If it falls further, the thesis has not changed, the company has not changed. Maybe then you can say okay, I’ll buy some more. Then it could rise and it could be up on a positive earnings report. This means that the business is doing well and improving. Maybe they expect better results in the future, the business improves.
The stock has gone up, maybe I can still feel comfortable investing in it because even though it’s hard to invest when the stock goes up, the company improves. If you think the growth of the business can continue, it may not be a bad time to invest because you are spreading your investment through the stock market movement. You just have to be comfortable with this type of investment.
Bill Man: You must be comfortable. Exactly.
Deo: There are times when I invest in a stock and it has dropped 5-10% over the next two weeks.
Mann: These days, an hour. [laughs]
Deo: I say. [laughs] But I don’t care because I put money in because I know over 3-5 years I’m very positive about this company.