When to know where the treasure is hidden in stock market.
We wait for the years to buy best quality stock at attractive valuation and the company which have competitive advantage, strong moat and have margin of safety.
The US stock bull market Ratio= Total Market Cap / GDP (2021–06–04) is around 200 % which state that today market is highly overvalued , which is suppose to be around 70% — 100% modestly Undervalued it is not so easy to find the under value stock but when there is a collapse in the financial market, we are easily able to search for the hidden treasure, the quality stock, which meet our standard as per value investing Framework .
First question the investor asked is that “Is it the right time to invest”? Or should we wait for more correction? The best we can do is to analyse the quality of the company and if we found that we have enough margin of safety, we should start investing.
Correction in the financial market is the indication to make enormous wealth, with no risk and to achieve good return. Currently the quality stocks are not available at discounted price are Apple Inc @ $125, Bank of America @ $ 43 , Visa Inc @ $228 , Johnson & Johnson @ $166 & Nike Inc @ $135.
These are the best stock to buy and hold for a long time to create wealth. There is no right time to buy all we required is a margin of safety and sell at a high price at the right time. To buy at this current level,at this valuation is not practical for long team investor .
Currently is not a right time to construct the quality portfolio. The coronavirus can be worst as it look like and that will affect the financial system, in this case we should not be waiting for the right time, if we get the right valuation, only once S&P 500 is at 4192 , all time high , this is not a level to buy ,the market might need a year to get right valuation ,that will be a right time to buy , be a intelligent investor , dont follow Mr.Market ,when there will be bloodbath in the stock market and you will get a good quality company at cheap price , you can buy without any risk and able to generate good return .
Already we have seen the reaction of stock market due to coronavirus ,all the sectors have reacted differently , the majority of degrowth is seen in automobiles , & Aviation , Hospitality , Oil & Gas.
All sectors are not affected equally; the current market is processing different information and reacting differently.
In last 1 year Tesla Inc has gain 223% compare to S&P 500 Return 34 %.
Best time to buy is when others are selling .Understanding the current market crisis; it is the right time to build a robust portfolio.
What we currently look in a company is the strong fundamental value. We should now focus on enough Margin of Safety rather then forecasting the earning or predicting where the market will be tomorrow .Due to low price, we can get margin of safety, a very good return in future and if the further price goes down, we should keep on buying , but when the market is in bloodbath .
We should wait for the the time to hunt for treasure at bargain price. We should not leave any stone unturned in creating quality Portfolio.
