Investors are wondering whether now is the right time to buy stocks. Investors tend to avoid stocks when the market is going down and chase them when the stock market is rising. There are bargains to be had right now in the stock market so long as an investor is cautious and shops smartly. Here are three types of stocks that you should be looking at right now.
In rough economic times, investors flock to dividend stocks because the payment can help cushion some of the downside if the stocks fall. In general, dividend stocks have stockpiles of cash that they use to pay dividends to shareholders. This means that they are some of the steadier stocks in the market representing stable companies. The risk with a dividend stock is that the company will cut or eliminate the dividend because they no longer have the earnings or the case to justify paying money out to shareholders. However, when buying stocks during volatile times, dividend stocks are one of the best ways to enter the market for those who are not looking to take on as much risk.
While tech stocks have been experiencing a bumpy road like every other company in the market, they have not had to completely shut down since many workers are able to continue their duties remotely. In addition, when the market rebounds, the tech companies will generally go up more quickly since they are higher beta stocks. Tech stocks are the best way to maximize market exposure in a hurry. If you are nervous about the volatility or the chance that these stocks may go down further, you can purchase a call option that will lock in the purchase price even if the stock goes up in the price. Conversely, the most that you would lose would be the premium that you have paid for the option.
The sectors that you should be looking at right now are the ones that produce essential products that people will need no matter what. In other words, luxury goods companies and other things that are necessary should not be where you are looking right now as an investor as people are simply trying to survive.
Customers will need medical products and drugs regardless of how the economy is doing. In many cases, the products that these companies make are in even higher demand because of the COVID-19 crisis.
When to Buy Stocks
Coronavirus has been an almost existential challenge for the entire U.S. economy. Investors have been fleeing stocks as the prospects for the economy are unclear at best. This means that investors need to be careful when buying stocks. Paradoxically, times such as these represent buying opportunities for the long term provided that investors are not trying to time the market.
The best way to buy stocks right now is a little bit at a time. If you have available money to invest, keep a shopping list of stocks handy along with your desired entry point. Do not invest all of your money at once. Instead, you should buy a little bit of stock at each level on the way down. The long-term trend is your friend provided that you can ride out the bumps along the way. The best thing for you to do right now is to be cautious, but that does not mean that you cannot take advantage of opportunities.
The volatility right now presents a long-term opportunity for investors. You can take advantage of others’ fear so long as you have both discipline and the ability to ride out the market’s roller coaster.
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