That's a famous saying by the billionaire Warren Buffet. When you have enough experience in the stock market you'd realize that he's absolutely right.
Right now we are in the middle of a market correction, this is expected as the market has seen record bullish sentiment for the past eight months or so. I've personally been very conservative when trading for the past couple of months as I knew a correction should happen anytime soon.
So how do you trade now?
Buying right now isn't a bad idea; in fact, the best time to buy when people are scared of buying. Many reputable companies have gone down 30% are in a great buy zone. But never go all in, always portion your trades just in case the market gets lower.
Recommendations for now? Right now is a great time to buy from solid companies that are known to have steady long-term growth. You can never go wrong with stocks such as $AAPL and $MSFT.
I believe that we are very close to the bottom of this correction for few reasons. I'm going to use AAPL as a gauge of the market's sentiment. Below is 2 graphs of APPL comparing last year's dip to this year.
As you can see last year's correction lasted 35 days, coincidently the correction we're in right now is exactly 35 days in. Not to mention, BlueWave is getting ready to give a buy signal and the RSI is oversold also the same as last year.
So yes, I'm buying in.
But! There is a safe way to buy in the market. This is my strategy:
Buy with only 30% of your initial investment.
Wait till and see for (1-2 weeks) to get a feel for the market.
If the market is reversing to a bullish sentiment then buy with another 30%. If the market gets lower then also buy with the other 30%.
The remaining 40% ill-use when the price falls another 2%-5%. Or vice versa.
Doing it this way will help you avoid getting in all at once, and missing on opportunities to average down.