Stock market volatility is on the upswing in late 2021, but shares seem expensive to many investors.
In this video from "The 5" on Motley Fool Live, recorded on Oct. 4, Fool.com contributors Brian Withers, Rachel Warren and Demitri Kalogeropoulos share their perspective on whether its a good strategy to try to time the market by waiting for declines before purchasing stocks.
Brian Withers: In your opinion will the market go much lower from here? Question number 1. Question number 2, is now a good time to deploy some cash? Well, we certainly will put the caveat that we can't offer personal advice to either of you. Where is the market going? Is now a good time to buy? Rachel want to take that.
Rachel Warren: Yeah. I'll jump in. It's great question. I do think that trying to predict the market is always a difficult moment, it is unpredictable. The only predictable thing about the market is that it is unpredictable. [laughs] I think that goes back to the whole point of where the strategy of long-term investing is so great because you don't have to predict the market.
You just buy really great companies that you're going to hold onto for a long time. It's very possible that the market could go lower, but it could also go higher. Over the lifespan of the market, it's historically gone up more times than it's gone down. But I think that's also something that truly great to remember. In terms of like whether it's a great time to invest, I always love to invest in companies when they are on sale. I don't indefinitely not alone in that. I've written about this a lot and then some of my articles that I always say what I do personally is while my meetings are short up and I see some great companies but maybe they're having a rocky few days and shares are down.
Maybe that's a good time for me to add a few to my portfolio. I think it's always a good time to consistently invest in great companies. Again, not providing stock advice, but my personal take has always been, if you're investing in great companies, then you can invest in the markets that we can invest when it's down, take advantage of those sales, but keep on, keeping on in the end. That's how you have a long-term winning investment strategy. [laughs]
Demitri Kalogeropoulos: I echo that completely, Rachel, good points there. I also don't unfortunately know what the market is going to do tomorrow or the next six months, but I do think that it's always a good time to invest.
I like the way you put that. Personally, I would say pretty much fully invested as I have been for a long time and I have some cash on the sidelines, but I might try to just regularly put more cash into the market, no matter what the market's doing.
I don't try to read into what I might think of what the economy could do. I'm constantly reminded that I have no idea what that is and even if I didn't know the future, I don't know how the market's going to react with future, like if you told me that we'd be sitting here 19 months after the pandemic started in the stock market is more than doubled that, I'd say, you're crazy.
All those unknowns, all that just tells me is that it, I guess the strategy I like is just consistent, steady purchase, fully invest for long periods of time and just try to pick good companies. If you don't have one and if you think things are a little bit more. The valuations are a little stretch right now, what I like to do, you can just buy the market itself.
Maybe not take on the risk of buying a growth stock, but you think in particular is particularly expensive, but just put the money into an index fund that mimics the entire market and just that where you invest in, you're not taking inordinate risk if you think we might have a drop. But as you said, drops are always good news anyway. It's just as an opportunity to buy more shares a couple of weeks now or whenever.
