| If anyone ever comes up with the perfect time to | | | | continue rising past where you think it should stop |
| buy and sell stocks, that person will own the world. | | | | (its called "everyone jumping on the bandwagon"). |
| Right now, timing-based stock trading is based on | | | | When a stock hits a point where you are sure that it |
| premises only slighly better than magic. There are, | | | | is significantly overvalued, sell.Buying stocks cheap |
| however, some good rules of thumb that you can | | | | takes the opposite approach. Only buy stocks that |
| follow which will help you find the best times to sell | | | | are cheap but which you think are undervalued and |
| your stocks high, and when to cut them loose when | | | | likely to significantly increase in price in the future. |
| they start to drop.The very most important thing in | | | | Stocks can only be purchased cheap by recognizing |
| investing, no matter what your goals, is to know the | | | | two facts. First, over the long term, the market is |
| true worth of the company you're invested with, and | | | | rational, and stock prices will reflect a company's |
| to keep track of that worth. You should only buy a | | | | value. But second, in the short-term, stock prices |
| stock when it falls below the company's true value, | | | | may undervalue or overvalue a stock. Finding stocks |
| and then sell it when it seems overinflated compared | | | | when they are undervalued is the key. But |
| to that value.To find those times to buy, look for | | | | remember, most of the time stocks are selling for |
| situations where a company's stock price is artificially | | | | close to their real-value. So, most of the time, stocks |
| low compared to its value. But the best time to sell is | | | | are trading close to what they're worth. This gives |
| when you think a stock is overpriced and will not | | | | you reason to be skeptical of stocks with low P/E |
| quickly grow into its overvalued price. Watch your | | | | ratios. But sometimes, low P/E ratios when combined |
| stocks as they rise and compare the market value to | | | | with strong growth and market share gain, can |
| what you think the real value is. One of the rules of | | | | indicate a buying opportunity. |
| the stock market is that whatever rises, tends to | | | | |