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Time to Buy?

At the time of this writing we are in the midst of a stock market downturn, do to the coronoavirus, even so many financial pundits advise this might be a time to buy stock.  It seemed like a good time to explore the how.

Buying stock can be done online

Like banking, investing in stock has gone online.  You can invest in the stock market without ever having spoken to another human being.  We are not saying that is good or bad, just that it is possible.  If you want financial advice in person there are still a wealth of resources for you out there.

First thing you must have is some sort of brokerage account.  If you do a little research you will find that there are several apps available now.  Among them TDAmeritrade, and e-trade.  What to look for?  Which stock market will the app allow you to purchase on?  The market we most commonly think of is the New York Stock Exchange (NYSE).  But there are several worldwide and even in the US, such as commodities markets.  On the NYSE you will have a wide range of companies to choose from.  But first you have to set up an account.

Once you have selected the app you would like to use, you will set up an account and then link a bank so you can fund your purchases.  Usually the app will require your banking information and then send you a few cents to test the link.  Then except those cents to be clawed back.  Now you can send money electronically to your trading account.

Next research.  You should do some research on every company you might want to purchase stock from.  You will want to look at the company’s annual report – you may even be able to look at this through your app – and determine what the company has been up to and whether you believe they are headed in the right direction.  As we have seen, markets can fluctuate for reasons not having anything to do with the company itself, so best to use your own judgment and values to determine if the company seems like they are doing well.  Do you like their product?  Do you like their CEO?  Have they had a good year so far?

Once you determine what company you want to buy into then you will determine how much you want to put in.  Usually you will put in a market request to buy – so, say you decided to invest in Bob’s Company, and the shares sell at $100 per 100 shares.  If that is OK with you, you go ahead an put in your buy order at market price.  If, however you like Bob’s Company but you think 100 shares are only worth $90 then you can put in a limit order.  And usually you can select a time frame – so when the stock goes to that number or lower your purchase will kick in.

Then once you have stocks, hold on.  Generally speaking, stocks are investments for the long term.  Even in a downturn such as we are experiencing.  Given enough time stocks will recoup and go back to the price at which you purchased.  And, in time, can exceed your purchase price. 

Day traders and stock brokers may engage in the dramatic day to day buying and selling of stocks, but in general that is not for us mortals, we buy and hold on and hope for a pretty good increase round about the time we need to retire or invest in our own company or a home or whatever the goal.

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