Here we go again.
Another day, another bullish investor in your inbox, getting excited about the rising stock market…
…as the FTSE 100 hovers around the levels seen during the bubble days of late 1999.
I know what you’re thinking.
“Another Fool banging on about buying stocks? Share prices are out of control! Must be time to get out of this market!”
Well, can’t say I blame you, but allow me to explain myself…
I have five good reasons why I’m still buying shares every single month in this current market…
…even though the atmosphere is more ecstatic than at any other time I can recall since those heady days of 1999.
All the hallmarks of an expensive stock market…?
Smart investors are afraid the stock market looks expensive, and has run ahead of itself this year.
I don’t blame them. In fact, I have to admit, I partly agree.
Yes, the market is showing signs that it’s getting carried away…
You know the sort of signals I’m talking about, Fools:
- Flotations such as Royal Mail and Twitter delivering tremendous short-term gains;
- Big Deals worth billions between the likes of Vodafone and Verizon;
- Market Fear evaporating, with the VIX ‘fear gauge’ running low;
- Bears suddenly becoming very quiet, while Bulls are making a lot of noise!
- Valuations have become stretched, and the market is in love with speculative, high-risk bets…
Short of being serenaded with share tips from taxi drivers, it’s almost a full set of worrying, contrarian indicators!
So why would I want to keep buying shares in a market like this?
Isn’t it best to be “fearful when others are greedy”, as Warren Buffett says?
… and yet I’m buying shares every single month
So let me give you those five reasons why I’m still buying.
By the way, I think you should be buying, too.
You see, not everything is expensive in this 2013 stock market. And that’s my first reason:
1) Smart investors can still find absolutely wonderful opportunities to invest for the long term right now.
You just need to know where to look. You see, not every high-quality company in the market has become overvalued.
And even ‘boring’ FTSE 100 shares – which many pundits called overvalued in 2012 – have celebrated rising profits and delivered these kinds of returns since the start of 2013:
- Next +48%
- Associated British Foods +44%
- London Stock Exchange +47%
- Bunzl +40%
So it’s not quite as clear cut as ‘everything is expensive’ in the current market.
As always, the stock market offers us thousands of companies to potentially invest in, at different prices every day.
And it’s a very rare event when there’s nothing attractive available to invest in. Indeed, I can share this fact with you first hand:
As an investment analyst at Motley Fool Share Advisor, I present and endorse investment ideas every single month that I think YOU should invest in, at today’s prices.
I put my money where mouth is, too. I’ve bought shares – which I still hold today, and will still hold in the future – every month since joining the Motley Fool.
On average, I invest the equivalent of 60% of my take-home pay back into the stock market every single month. That money isn’t coming back out for a long while.
Which brings me to my second and third reasons for still buying shares today…
2) I’m probably going to be a net buyer of shares for the next 40 years… and 3) the prices are going to smooth themselves out over time.
That means I have a long time horizon, and that the money I’m putting into the market now is going to be there for the long term. I don’t care if the shares go up or down this week, this month or even this year…
…because on average I’m going to be buying into great businesses at prices that make sense.
Viewed in that light – why wouldn’t I still buy today, if there are companies on offer that I’m happy to hold for years and years, at prices I like?
And 4) with interest rates and bond yields at rock-bottom levels, you can see why I’m NOT sticking money into fixed income or a savings account. Such awful alternatives are my fourth reason for loading up on shares.
The investment geeks digging for the best share ideas around
As a relatively young investor, I’m at a stage where I need to focus on building long-term holdings in equities – I’m in a position where I can concentrate on shares more heavily than most.
To do this, I spend most of my time researching new companies and generating new investment ideas.
Not everyone has the time to spend their daily lives researching share ideas!
But no matter how much of your portfolio is invested in stocks, in a market where high-quality, fairly-priced situations are hard to find…
…I think everyone could benefit from taking on board ideas from the investment geeks who persistently dig for the best ideas around.
Fortunately, the Share Advisor team appears to be pretty good at doing exactly that.
Don’t be alone in this market
It might be a roaring period for the market, but smart investors know the difference between price and value.
In this market, finding more of the latter and paying less of the former is a difficult judgement that you don’t need to face alone.
My final reason why I’m still buying the right shares today is 5) the confidence I have in the long-term future of the first-class businesses I’m invested in.
When you’ve researched a company thoroughly, debated its pros and cons, grown to understand its business and believe it sports attractive valuation, you can become very confident in your own ideas.
When I say “don’t be alone in this market”, that goes for finding and researching ideas, too.
I am convinced you stand to benefit – and become more confident – by joining a community of investors (such as the Fool Boards) to share and discuss opportunities.
Needless to say, The Motley Fool and Share Advisor isn’t just about supplying you with investment ideas in a market where value is hard to find…
…it’s about the world-class community, and educating investors to find and become confident in their own ideas.
With all this in mind, I hope you’re still finding attractive shares to buy in this market!
