If you are going to buy index funds, ETFs, or mutual funds the answer is no. 12 months ago the Dow was sitting at 20,269 and today it is at 24,640. Broadly speaking the market is still very high. You should not buy stocks when they are overvalued.
You can invest in individual stocks, but you have to be very selective. Only buy quality stocks when they are undervalued.
Here’s how you know if a stock is undervalued:
Here’s how you know if it’s a quality stock, follow my 12 Rules of Simply Investing:
1. Do you understand the product or service offered by the company?
2. Will people still be using this product or service in 20 years?
3. Does the company have a low-cost durable (lasting) competitive advantage?
4. Is the company recession proof?
5. Has the company had consistent earnings growth?
6. Has the company had consistent dividend growth?
7. Does the company have a low payout ratio?
8. Does the company have low debt?
9. Does the company have a good credit rating?
10. Does the company actively buy back its shares? (optional)
11. Is the stock undervalued?
a. The P/E Ratio must be 25 or below.
b. The current dividend yield must be higher than the average dividend yield.
c. The P/B Ratio should be 3 or less.
12. Keep emotion out of investing.
Learn to Invest
Learn how to invest, market drops are normal, the key is to remain calm, and follow the 12 Rules of Simply Investing. Don't wait to start investing.
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