Shopping for stocks

QI want to buy some stocks. Is there a best time of day, week, month or year in which to do so? — H.L., Lubbock, Texas

ANot really. Guessing about it is “market timing,” which is not a road to riches. Instead, invest when you’re ready — once you have done enough research to be confident that the company is financially healthy and growing, has sustainable advantages over its competitors and has a promising future. You also want the current stock price to be low enough that it offers you a margin of safety and a good chance of growth. Some companies may be wonderful but so overpriced that they’re more likely to retreat for a while than to keep advancing over the next year or so.

Estimating a company’s fair value is easier said than done, though. Measures such as priceto-earnings (P/E) ratios and price-to-cash flow ratios can help. Favor ratios that are lower than average for the company and lower than those of peers. To polish your analytical chops, keep reading and learning about investing.

Once you’re confident you’ve found a great company selling at a good or great price, that’s the best time to buy.

QShould I invest in “balanced” mutual funds? What are they? — P. D., West Palm Beach, Florida

ABalanced funds are invested in both stocks and bonds, offering gains from stock appreciation and stock dividends as well as income from bond interest. Many fund families offer balanced funds, often with different proportions of stocks versus bonds.

You don’t necessarily need a balanced fund, though, since you can invest in separate stock and bond funds. It’s also good to diversify with some international holdings, as many foreign economies are growing much faster than America’s.