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Is Now the Time to Invest?
A student recently asked me for investing advice, leading the question with the fact that the resulting condition of the global economies, a function of the COVID-19 pandemic, seemed to have made this time now the most opportune to buy stocks and, presumably, sell them soon for a quick profit.
It was the type of question that was looking more for validation than speculation.
He had asked because I once mentioned that for two decades, I have spent more time than I would like to admit trying to understand the market forces, evolving industries and company valuations, all in an effort to find the secret investing algorithm myself.
The truth is, if I could give useful investing advice, I would be in the business of giving useful investing advice. Maybe more important, if I was good at investing, I most certainly would NOT want to provide my secrets of good investing to others.
Why? Because of market equilibrium.
What this means is that markets are pretty efficient, and buying opportunities — such as those that might be perceived as arising from a global pandemic — have already been priced into stocks.
Short-term investing requires the ability to identify inefficiencies, or arbitrage, which allow you to know something others don’t, and therefore be able to take advantage of…
