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Is now the time to consider a stock investment?

With the FTSE plunging 1,000 points in a few days and Wall Street in turmoil, it's understandable that investors are scampering for the safe havens of gold and bonds. There is a school of thought though that stocks will recover the lost ground, and that now is the time to reconsider a stock investment.

There is always a minority who are buying when most traders are shouting sell, sell, sell. For the small investor it's a gamble, and the best gamblers make sure they have the most information before they place their bets.

Stock markets are very edgy, and likely to remain so for most of 2011, but edginess nearly always results in pessimism. Market meltdowns are caused by panic, when rational investors can keep a cool head and assess which stocks are still safe, and which are undervalued.

Check the stock market advice and news on sites like www.thisismoney.co.uk and www.businessweek.com, and prepare to see the bigger picture.

A look at a long-term graph of the FTSE for instance will show a pattern of steady climbs followed by alarming plummets, followed by steady climbs. The art of course is recognising the depth of the plummet and getting your money in the markets at the start of the climb.

Look for real experts who can identify what market analysts call the moment of maximum pessimism, when panic selling has reached its natural conclusion, and the only way is up.

A secondary consideration is the dividends paid by some stocks. In many cases these are higher than anything you will find in a savings account. Even if the value of these shares is heading downwards, you are still getting a return on your stock investment. Fortune favours the brave, but maybe don't pile everything into a few stocks. It's only sensible to hedge a little.

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