![]() I went ahead and bought shares of Microsoft at a P/E ratio higher than 20 and more than quintupled my money. Even dumber, I read somewhere that if you only have $1,000 to invest, it’s not worth doing so. Many years ago, I was advised to never buy a stock with a price-to-earnings (P/E) ratio above 20. My Smartest Investmentįrom A.J., Kingwood, W.Va.: My smartest investment move has been ignoring dumb advice. If you keep a watch list of companies you’d love to own, you’ll be ready to move if and when they dip into attractive territory. It’s never worth trying to “time the market” - guessing when stocks have hit a bottom or a peak - but it can be worthwhile to keep a little cash on the side, to be available when you want to go shopping. There’s a silver lining to a market decline: It produces bargains for long-term investors to pounce on. Investors seeking long-term success must be patient. ![]() Through all that, they’ve often just hung on to their shares, not letting themselves get rattled or distracted. Think of those - including superinvestor Warren Buffett - who have amassed great wealth via the stock market: They’ve generally done so over many years, through market upturns and downturns. You don’t want to have to sell shares when they’re down, so give them time to recover after any downturn.ĭespite its volatility, the stock market has only gone in one direction over the long term: up. This is why you should never park money in the stock market that you expect you’ll need within five years (or 10, to be more conservative). In reality, the market might advance for four years in a row, and then decline for two years. On average, you can expect a market decline every three years or so. For starters, volatility is simply to be expected in the stock market.
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