A once-in-a-decade opportunity to buy dirt-cheap shares

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on

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I see a lot of cheap shares to buy right now on the FTSE. But for how long can chances like this last?

Imagine inflation is back to around 2%, and interest rates are down with it. The economy is growing, not by much, but it’s growth. Oh, and the war in Ukraine is over.

Higher, lower?

Would share prices be higher? Yep, I reckon it would be a sure-fire thing.

And I’m confident all that will happen. I mean, it’s just the way things are, in between our crises. Yes, we have had some real killers in terms of crises in the past few years.

But I’m still upbeat for the long term.

So, the next question. What should long-term stock market investors do now? I think that’s clear.

Buy when cheap

We should buy shares when we’re in a slump and they’re cheap, surely?

If stock market history is anything to go by, the chances that things will be fine and share prices will be higher when we later want to sell must be good.

I know past performance is not an indicator of future performance. That’s true, for sure. And buying shares always brings risk.

But looking back at UK stocks over the past century, one thing is clear. The longer the timescale we look at, and the more we diversify our stocks, the more periods of gains we see.

Best time

Ten years ago, I just don’t think we had the same super cheap shares to choose from. And 10 years from now, I doubt we will either.

So I’d say we should buy as many shares as we can in a diversifed selection of stocks when prices are low. I mean, that’s obvious, right?

Well, it seems obvious to me. But I keep seeing people do the exact opposite.

In and out

When the stock market is weak, they sell all their shares and go buy gold. Or even put their money in a Cash ISA. Eek!

And when the mood is bullish and share prices are soaring, investors pile into the stock market and pay top whack for shares they could have bought for a lot less back when they were too scared.

Our goal is to buy low and sell high, right? But the way so many people go about it, they inevitably do just the opposite.

Sentiment, yuck

It’s what happens when we look at the short term, and are driven by market sentiment. But sentiment is just a word for emotion. And emotion must be the investor’s worst enemy.

What if we could just not look at stock market charts for a whole 10 years, and only had classic valuation measures to go on. I mean like price-to-earnings (P/E) ratios, dividend yields, and earnings forcasts.

Would it make any difference, not having a clue where the market has gone in the past decade? It really shouldn’t.

My rule

So for me, my rule is buy when cheap, and pay no attention to that man behind the curtain… er, I mean stock market charts.

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