Due to the known issues from the Europe, debt default has caused quite a stir in year 2011. Will there be a market crash by this year 2012. I have no idea but I’m preparing for it with my cash and companies under my watch list.
Most people will prefer when the market is good however, for myself, I will prefer the market when is bad. Because I’m able to buy shares that are heavily discounted from its intrinsic value to profit it from capital gain inclusive the dividends I will be getting.
But that doesn’t mean when the market is good, we will not have any chance to invest. The best opportunity will be, when the stock market is not doing well.
For those companies that I have invested & even if I am not buying anymore shares in regardless the market condition, it will still add wealth for me over time.
Probably, this will puzzle you. Let me explain to you.
How those companies will add wealth to me, through share buyback & dividend increase.
I only invest in companies that have been in business with strong historical records and have successfully weathered the bad times especially the recessions. These companies usually offer products or services, people will need and use in good times and bad.
Because those companies are in the mature industry with a lot of free cash flow. At times, they will either increase their dividends or do share buyback.
So, overtime, this will helps to increase the wealth for shareholders like myself.