better buying down or going up?

[scp]

I was told that I'm better off buying as stocks go down, not after they've "bottomed out"- what are your thoughts, other than there's no way of knowing when's it going to bottom out.

If I'm watching several stocks everyday and believe that the prices could still go lower (up to first half of next year), wouldn't I be better off waiting until I see all time lows first, then pick them up when they show some improvement? I'm watching several of them, so it's not as if one stock rebounding really quickly will put me off investing, I can always invest in something else.

I've been buying a bit (maybe too much) over the past month, and think I might wait it out a little longer- I have trades sitting there in case prices drop drastically when I'm not looking, but I'm thinking of taking some of that money out and putting it in savings to spread it out more evenly over the next several months. Is that first rule of thumb for people who aren't watching the stocks every day?

[sweeps]

How do you know when a stock has bottomed out? Let's say a stock dropped from $80 to $20. Then it started to go back up to $30. Nothing prevents it from dropping again, this time to $15.

Since you can't predict such movements, it is better to continue putting money into the stock on a regular basis. Assuming of course you have confidence in the future success of the company.

[maat55]

If I were willing to hold the stock for the long haul, buying now is as good a time as any. If you are trying to make a quick buck, you might get spanked.

[disneysteve]

The simple answer is that you don't know what the price will do. If you believe the stock is undervalued now and you are investing for the long-term, you should buy it. Sure, it might drop farther, in which case you could always buy more to lower your average cost basis. You don't know what the bottom is until it is gone, by which time you've missed some of the recovery. If you wait until they show some improvement, you've missed that improvement.

[tripods68]

I'm just sick the way this market is behaving. Some days we are up and some days we are down...but lately its just going down the hill. I've had it....I won't watch CNBC or read how the newspapers in the next few months. I won't even bother checking my online investments. Everything else is pathetic. Don't get me wrong, i'm still long but its hard to watch our investments keeps going down.

[Broken Arrow]

Agreed on the point to simply dollar-cost average....

In an ideal world, all of our money would be in cash and we would wait until the market has bottomed out, and that's when we would buy all-in, watch our money shoot up like a rocket, and live happily ever after.

So, in this ideal scenario, you wouldn't want to buy something while it's still sliding down. Unless you're shorting. No, you want to buy when it has bottomed and is on its way back up.

But as the others have already mentioned, trying to figure out when the market is going to bottom out (before it does) is next to impossible. Not that I am discouraging the effort. Like a ship meandering in a sea of dense fog, even if one can not see the hand in front of them, that doesn't stop would-be sailors from trying anyway, regardless of success or failure.

But in the end, the simplest answer is to dollar-cost average. Whether you contribute once a month or even only once a year, I would just keep chugging along in a regimented manner.

[jIM_Ohio]

You need a better premise than buying on way down or buying on way up.

Why are you buying to begin with?