You Missed the Best Day to Buy

There once was a woman who prayed every day for 20 years to win the lottery. Every single day. Finally, in despair, she said, "God, I've been a true and faithful servant and have lived an exemplary life. Why won't you grant me this one thing?"

"Look," said God, "at least meet me half way. Buy a lottery ticket."

Buy the ticket
Similarly, to take advantage of the greatest long-term wealth-building machine available to us individual investors, you have to be in the market. And if the current craziness is keeping you away because you fear a huge drop, you're ignoring the advice of some of history's top investors.

In the latest edition of his book, Stocks for the Long Run, Jeremy Siegel charted returns for a hypothetical, unlucky investor who happened to invest at the absolute peak of six major 20th-century markets. After 30 years, this investor accumulated four times more wealth in stocks than he would have in bonds, and five times more than in Treasury bills. For a 20-year period, he doubled the return for bonds.

There's more where that came from
Consider John Templeton, founder of Templeton Growth Fund, who is widely regarded as one of the best investors of his generation. His advice about getting into the market is simple: "The best time to invest is when you have money. This is because history suggests it is not timing which matters; it is time."

Our own David and Tom Gardner, who've beaten the market by a tremendous amount in Motley Fool Stock Advisor, also eschew timing the market. "The best time to invest was yesterday," says Tom. "The next best time is today."

So although the tongue-in-cheek title of this article implies you've missed your best chance, you can see that you really haven't. If you've got money you won't need for five years or more, get in the game as soon as you can.

Still need convincing? I looked back a decade, searching for companies that had been up 50% or more in one year. Surely, many investors back then were worried that stocks were too rich and ready for a great fall.

Well, a gnarly bear market did start up a couple of years later, and yes, these stocks fell. And despite their tremendous prior one-year gains, and despite the great bear market, the returns for those who held for the long term were magnificent.

Company

June 1998
to June 1999

June 1999
to Present

Apple (Nasdaq: AAPL  )

73%

1,440%

Qualcomm (Nasdaq: QCOM  )

427%

200%

MGM Mirage (NYSE: MGM  )

68%

271%

Adobe (Nasdaq: ADBE  )

102%

301%

National Semiconductor
(NYSE: NSM  )

64%

106%

United Technologies (NYSE: UTX  )

51%

106%

Oracle

114%

157%

S&P 500

21%

6%

There are no guarantees
Many companies from that decade haven't returned to their all-time highs of 2000, but history shows that you will rarely be disappointed if you can:

  • Find superior businesses with good management.
  • Hold for the long haul.
  • Add new money regularly.

That's the advice David and Tom give to their Stock Advisor members, and they help them with not only new recommendations each month but also the top five stocks to buy right now. They've been at it a long time, through bear and bull, and their average recommendation is beating the market 57% to 15%.

Right now, a special, no-obligation free trial will give you access to all these stocks and more. Here's more information.

This article was first published Jan. 25, 2008. It has been updated.

Rex Moore is an analyst for Stock Advisor and thinks now is a good time to buy stocks. He owns no shares of the companies mentioned. This information is brought to you by the Fool's disclosure policy.


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  • Report this Comment On June 19, 2008, at 4:15 PM, rkresge wrote:

    This is a fair article, obviously a slow day at the Fool (aka Idiot). The problem with this article is that back in 1999 assuming the Fool was around and writing the would have not recommended Adobe. In Fact the Fool would have pointed out what a sorry company Adobe is. And as we all know they would have been wrong. And History repeats itself since even today the Fool is wrong. But just my take on the fool.

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