In the past month, the FTSE 100 is down by more than 6%. So if I were to follow Sir John Templeton’s advice that “The time of maximum pessimism is the best time to buy“, then now’s a great time for me to buy shares, right?
But wait — since the beginning of the week, the Footsie is now up by 2.8%! So has the time of “maximum pessimism” been and gone, and I’ve missed my buying opportunity?
Well, no. But you knew that from the headline I wrote, didn’t you?
A brief history of recent times
It’s clear to all that the stock market is turbulent right now, and realistically it has been pretty erratic for the past two years.
First Covid-19 (leading to falling markets), then progress on vaccines being developed (seeing an upswing in the FTSE 100’s chart).
Followed by new variants and further lockdowns placed on Brits (another trough) before the economy showed signs of recovery (leading to a peak not far off all-time highs).
And now Russian President Vladimir Putin’s invasion of Ukraine causing near-daily swings in global markets…
Stocks under the microscope
One of the last times in recent years we saw such choppiness was between June 2015 and February 2016, when the FTSE 100 lost 20% in value, dropping to 5,537 on 11th Feb ’16 from 6,953 on 1st Jun ’15.
So did anyone buying shares after February 2016 — arguably the end of “maximum pessimism” in that period of time — mistime the market? Let’s take a look at a handful of examples:
Beginning 11th March 2015 — this time seven years ago — Greggs shares rode the volatility and by April the following year were only up 1%. Fast forward to today, the share price has increased by almost 130%!
From brick-and-mortar to the internet, let’s look at Rightmove now. From today’s date in 2015, its share price bucked the trend showed by the FTSE 100 and was up around 40% by March 2016. But over the past seven years, the shares have more than doubled!
Never too late
So to recap:
- not buying shares in quality companies just because you think you’ve missed out on the bottom of the market is foolish;
- having a Foolish, buy-and-hold investing mindset can lead to huge gains over the long term.
Whenever I have money to spare — that I won’t need in the next five years — I will likely always put it to good work in the stock market. Not for me, the paltry interest rates on savings accounts.
And while I’m fully aware that investing in shares puts my capital at risk and I may get back less than I invested, I’m confident that spending time in the market is a far better strategy for me than trying to time the market.
After all, who’s got time for that? I’d rather buy shares in quality companies, no matter the state of the market.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Sam Robson owns shares in Rightmove. The Motley Fool UK has recommended Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.