I reckon it’s a great time to put £25k to work in the stock market and aim for a million. And I’m not alone. Canadian multi-millionaire and venture capitalist Kevin O’Leary thinks the recent volatility in the markets means it’s a good time to snap up stocks.
He said to CNBC that last week’s plunge in the American stock market means volatility is back. And he thinks it’s a good idea to buy attractive stocks now on weak market days because “we can’t guess the bottom”.
A contrarian approach
Meanwhile, it’s known that the great majority of retail investors like me tend to take a contrarian approach to investing. All those teachings from Warren Buffett, Benjamin Graham and others have found their mark. And many investors seek value above all other considerations when picking shares. I think that’s a key tactic when aiming for a million.
So, O’Leary’s call to arms should fall on listening ears. And it certainly chimes with my approach. I’ve been buying shares in bombed-out sectors for some weeks now. But I reckon its unwise to expect instant profits. The volatility must work through. And another key to investment success is likely to be the adoption of a long-term approach. Therefore, I’m aiming to hold my stocks for at least five years and probably longer than that.
O’Leary is one of the voices I reckon is worth listening to. He has a strong record of success as an entrepreneur. And he featured on the television series Dragons’ Den and ABC’s version of the series, Shark Tank.
However, as always, the general economic outlook is murky. Central banks have been raising interest rates to fight inflation. And they need to perform a delicate balancing act if they’re to avoid choking off economic growth and plunging economies into a deep downturn. So, it’s perhaps unsurprising that stocks have been bouncing up and down trying to find direction. If central banks get it wrong, businesses could suffer.
Signs of improving fundamentals
Nevertheless, I’m encouraged by the recent easing we’ve seen in many commodity prices. I’m talking about resources such as oil, copper, iron ore, lumber, wheat, oats and crude palm oil, among others. My guess is that lower prices will affect finished goods and services in the end, causing a braking action on inflation.
On top of that, Drewry’s composite World Container Index decreased by around 8% last week. And it’s now around 50% lower than it was a year ago. According to Drewry Shipping Consultants, shippers are seeing ongoing improvements after two years of port delays slowed transit times.
I reckon relief from the well-reported supply-chain issues of recent months is another factor that could work to bear down on inflation.
Such factors strike me as being good for the general economic outlook. And that means they could be positive factors for businesses and shares. However, I don’t expect to be right about all my stock selections. All shares come with risks as well as with positive potential. So, I’m approaching all my investments by considering risk first. And that’s another factor I reckon is key to succeeding when investing in stocks.