How to Buy Stocks in an Uncertain Market?

How to Buy Stocks in an Uncertain Market? Current stock markets all over the world are in great turmoil. The markets are experiencing a new wave of uncertainties with abnormal ups and downs every other day. The confidence level of many an investor is at a new low. In the shadow of prevailing uncertainties in the markets, many investors might choose to abstain from the market rather than to buy stocks.

Yet, under the same roof of uncertainties, a group of experienced traders maintain a strict vigil over the market for a different reason. They have got their own vested interests in a falling market. But they are not necessarily Bears, because this group is not 'Shorting'. They have been taught by their trading Gurus to play for the long term and follow an age-old strategy of "buying low (during panics) and selling high (during market exuberance) to enjoy maximum gains when they sell in a rising market later. Therefore, they have already zeroed-in onto some stocks which have been sieved through a very tight quality control mesh except for the price. We can not put these traders under the category of Day Traders or Swing Traders. In fact, they are not traders in a sense, because they do not trade regularly. They are altogether a different breed who have developed a nice nose to smell their pot of stocks! And the ingredients that go into making it delicious are given below for your benefit: 1. Stocks trading below their book values: In simple terms, the stocks which are being traded below their Book-Value are going to be bargain hunts. Book-value is the value at which an asset is carried on a company's balance sheet. In other words it is the total value of the company's assets that shareholders would theoretically receive if a company is liquidated. Therefore it should be seen as an opportunity to buy stocks in an uncertain market. This investment will bring handsome gains whenever the market bounces back. 2. Low Debt-Equity ratio stocks: While checking the 'Fundamentals' of a company, an experienced investor will go for the stock of a company whose 'Debt/Equity Ratio' is 'below One'( -1 ) it shows that the company has a lesser debt burden or if the company is cash rich, then probably it might be enjoying 'Zero Debt'. Such companies are always good and have spare cash to pay the interests on their loans. If the fundamentals of the company show that 'Debt-Equity ratio' is 'above One' (+1 ), it means that the company is utilizing debt for financing its assets rather than equity. Therefore, the companies that have 'Zero Debt' should be targeted for accumulation during the market recessions. 3. Buying blue-chip stocks: The most safe and time tested strategy for an investor with a medium to long-term perspective is to go for blue-chip stocks even when the markets are falling. Once the markets consolidate and bounce back, the first stocks to move up will be the blue-chip stocks as they form the index or they are heavy weights. Whenever there is an increase in the index heavy weights, these stocks too follow suit. Wise investors are not afraid off falling markets and keep investing judiciously. The strategy explained above has been put to use by several investors who could not bear the strains and tensions of daily participation in the stock market. Overall this method suited well to the investors. Warren Buffett is the best example who put to the best use of falling markets and the Investment principles narrated above to create his world famous Berkshire Hathaway. How to Buy Stocks in an Uncertain Market?