Should You Buy Stocks When the Market Crashes?
There's a saying among stock traders: Don't try to catch a falling knife. And with the S&P 500 down by more than 22% this year so far and more market turmoil expected in the near future by practically everyone, investors are right to wonder whether they should be continuing to buy stocks even when there's a crash.
There's more to being a shrewd investor than knowing pithy nuggets of wisdom, though. As it turns out, buying stocks when the market crashes can be an excellent strategy so long as you refrain from trying to trade in and out of a position at the "perfect" time.
Let's use the recent coronavirus crash in March 2020 as an example of what can happen if you decide to sit out when the market is tumbling. Suppose it's early in February of 2020 and you are thinking about buying shares of a growth stock like STAAR Surgical, (NASDAQ: STAA) a company that makes implantable lenses for vision correction for people with myopia. Seeing the mounting pandemic wreak havoc on the financial markets, you opt to defer your purchase until the seas are calmer. When the crash happens in March, you pat yourself on the back for your farsighted choice. As it turns out, that would have been a big mistake.
Source Fool.com
