If you have some cash lying around, why not buy something in this market.
Prices are cheap, and while they may get cheaper, you can get a good deal on most companies listed on the market. If you are looking to get rich quick, then stay on the sidelines. But if you are looking to pick up some equity in your favorite companies and hold on to those shares for a few years, now is the time.
Consider the following when doing so:
- Pay no attention to macroeconomic trends. You cannot possibly predict the future.
- Stick to your “circle of competence”. Buy companies that you understand.
- Try looking for managers that treat their shareholders money as if it were their own. Mangers that might have bought back their company stock in this environment. People interested in creating value.
- Study prospects and competitors of a potential investment. Who else is in that space?
- When you are convinced that a company is a good company and meets this criteria, why not buy it?
Believe it or not, these are some of the basic and core principals Warren Buffet lives by. Although it’s unlikely that you will ever come close to his skill at dissecting businesses, prices are cheap enough that you can get away with finding a good deal.