Investing

Buying stocks at 52 week highs

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Deal Fanatic
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Jun 19, 2009
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Scarborough

Buying stocks at 52 week highs

What is your philosophy on buying stocks near/currently at their 52 Week highs? There's an index ETF that I'm holding off from purchasing because it is at an all time high (VCE for those of you who are interested). Should I just buy it or should I wait for it to drop a little before buying? I'm a long term investor so I will not be selling it anytime soon.

Thanks for the advice :)
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Deal Guru
Mar 20, 2003
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New-Brunswick
Hrmmm, I am not good at playing the stock market but at a 52 week high, I would think you'd want short a stock, not buy into it (though I don't think you can do that on ETFs- I'm just using that for an example)... The DOW and S&P are nearly at all time highs so you have to wonder how much higher they can go before you see a correction.
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Apr 30, 2012
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Montreal
I wish I bought a ton more back in mid-November, it got a serious beating. Now's not the time to buy. Maybe buy AAPL and IMG.
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Mar 19, 2010
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Markham
Feneant wrote: The DOW and S&P are nearly at all time highs so you have to wonder how much higher they can go before you see a correction.
The DOW and S&P are back to where they were in 1999. Most companies balance sheets are in a great shape today.
Deal Addict
Sep 30, 2008
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SkimGuy wrote: What is your philosophy on buying stocks near/currently at their 52 Week highs? Should I just buy it or should I wait for it to drop a little before buying? I'm a long term investor so I will not be selling it anytime soon.

Thanks for the advice :)
Not only your one ETF, the whole S&P500 index is close to the "peaks", with two previous peaks in 2008 and 2000. Therefore, with the stock price surge in the last 4 weeks (thank you very much), u find many many stocks are at their 52 weeks high now, except RIM, APPl, etc. I read some weeks back that about 24 stock analysts predicted, on average, that the S&P500 would go up to about 1580 by dec 2013, and therefore there are still rooms to go up, although they may be bumps and dips on the way, but then again u said u are a long term investor. The economy appears recovering, and there is less reason to believe that the S&P goes south at this peak like it did in 2008 and 2000 unless something unexpected turns up like another 9/11. And, u may wish to wait for the next dip and buy.
Deal Addict
Feb 20, 2008
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SkimGuy wrote: What is your philosophy on buying stocks near/currently at their 52 Week highs? There's an index ETF that I'm holding off from purchasing because it is at an all time high (VCE for those of you who are interested). Should I just buy it or should I wait for it to drop a little before buying? I'm a long term investor so I will not be selling it anytime soon.

Thanks for the advice :)
If it's an investment that you plan to hold onto for a long time, it's probably fine.
Deal Addict
Dec 11, 2007
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Markham
depends on cash percentage in portfolio
if i didnt have much cash to deploy, i would wait
if i had a decent amount, i would buy some of it on a 1-2% pullback and slowly add in, even if at 52 week highs, and look for bigger corrections to add
Member
Jul 17, 2011
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TORONTO
SkimGuy wrote: What is your philosophy on buying stocks near/currently at their 52 Week highs? There's an index ETF that I'm holding off from purchasing because it is at an all time high (VCE for those of you who are interested). Should I just buy it or should I wait for it to drop a little before buying? I'm a long term investor so I will not be selling it anytime soon.

Thanks for the advice :)
While I like getting a deal, timing the market is next to impossible for most -- and should be less of a concern for a long-term investor. Invariably, almost every stock I've ever bought has sold for less within the next several days, let alone the next 52 weeks. Still, as a long-term investor (15+ years), I'm doing quite well.

One really should evaluate a stock's future potential earnings/return versus its current price regardless whether it is at its past 52 week high or low.
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Cerenity wrote: depends on cash percentage in portfolio
if i didnt have much cash to deploy, i would wait
if i had a decent amount, i would buy some of it on a 1-2% pullback and slowly add in, even if at 52 week highs, and look for bigger corrections to add
I keep my cash separate from my investment portfolio, I only transfer cash to my portfolio when I need to rebalance/add more funds into the account (usually at the beginning of the year). So I guess you could say the cash portion of my portfolio is 0 :P
Deal Fanatic
Jul 1, 2007
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Stocks aren't always rangebound. Over the long term they've tended to hit new 52 week highs on a fairly consistent basis.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Sr. Member
May 5, 2010
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Be greedy when others are fearful and fearful when others are greedy. Low interests says a lot of expected inflation and inflated equity prices. As far as something as broad as the market index goes, myself would not be buying; especially if you're looking to buy and forget.

According to their site there are 97 constituents mostly large and mid cap. If I were you I'd double check to see if its by market capitalization. Sure theres lots of diversification but no point of buying if on average everything is trading at their highs.
Deal Expert
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Dec 11, 2005
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Normally I would avoid unless it is on a rapid upturn, but an index ETF is a different ballgame, 52 week high for the index is not really relevant since it should be growing every year anyway.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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Feb 17, 2007
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http://www.google.com/finance?chdnp=1&c ... qLx0gHBvAE

As you can see, it peaked in 2000, and peaked again in 2007.
It was technology bubble in 2000, and housing bubble in 2007.
One could argue that it's money printing bubble in our current time.
Well, where could we put our money that can beat inflation?
Back in 2000, we could get 5-7% from 10-year US T-Bill.
Back in 2007, we could get 4-5% from 10-year US T-Bill.
Currently, we get around 2%, and last year's CPI was 3%. We lose 1% in pre-tax loss to inflation.

"Well, it doesn't mean we got to invest in stocks".
Here are some facts to consider:
1) When you look at most companies with record balance sheet, record earnings, you will think other wise.
2) The valuation for these earning power aren't even historically high.
3) Amateurs are still very shy of stocks. A lot of them hasn't returned to the stock market since the 2000 technology bubble.
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Luckily this stock is taking a bit of a hit with the drop in the TSX today. I'll buy in February when it drops a little lower as to take advantage of the "Free ETF purchase" promotion from Questrade :)
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Jan 14, 2012
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Woodbridge
52 week high probably isn't a huge view of historical stock price so I wouldn't be overly concerned with it, if anything it's positive and can/will be surpassed many more times. The whole point is to increase year after year lol, I can see why being anxious though with all index's getting close to pre-crisis levels.
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Apr 30, 2012
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Now's the time to jump off the boat. Being too greedy can hurt badly.
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Aug 28, 2010
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Halifax
Here's a chart of the Dow since 1900.

http://stockcharts.com/freecharts/histo ... a1900.html (note that the y-axis is a log scale)


If people insisted on not buying when it was near the 52 week high, they would have missed much of the growth for the 20 years beginning around 1943 and for the 20 years beginning around 1980.


Study after study shows that nearly all market timers underperform. People who are considering market timing need to ask themselves why they believe they are so special and won't underperform. Nothing personal, but chances are that you aren't special.
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Dec 26, 2010
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Calgary
FunSave22 wrote: Here's a chart of the Dow since 1900.

http://stockcharts.com/freecharts/histo ... a1900.html (note that the y-axis is a log scale)


If people insisted on not buying when it was near the 52 week high, they would have missed much of the growth for the 20 years beginning around 1943 and for the 20 years beginning around 1980.


Study after study shows that nearly all market timers underperform. People who are considering market timing need to ask themselves why they believe they are so special and won't underperform. Nothing personal, but chances are that you aren't special.
This is all that needs to be said. The question isn't whether it is worth buying at a 52 week high. The question is whether it is going to go up or down from there. And you don't have the answer to that.

Stay out: Market goes up, you lose out. Market goes down, you win.
Go In: Market goes up, you win. Market goes down, you lose.

Flip a coin. Or better yet, just buy when you need to buy and avoid this game of timing.
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Dec 11, 2007
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Markham
i think the problem with timing isnt so much the attempt to time, but that people who attempt to time tend to try to time it perfectly, and react violently when they dont time perfectly

so you get a lot of cases where someone is trying to buy on dips, only to sell when they realize they didnt find the bottom, only then to have the market/stock turn, but now they feel bad about it being a few % higher than where it just was the other day, so they wont buy, looking for a pullback, and it'll just run away from them

timing actually works pretty well if you rarely sell, and mostly just buy on dips or buy when valuations are attractive to you. buy more if it dips more and valuations remain attractive. as long as the company is doing reasonably okay, and not extremely hyped/overvalued, i see no reason to sell.

dont mind too much whether you are buying a dollar for 60 cents or 80 cents. it will work out pretty well either way in the long run. if you have a lot of cash, and valuations are good, buy some even at 90 cents on the dollar. if you dont have a lot of cash (mostly invested) then you can be a bit more picky about when to add, waiting for the bigger discounts to say 80 or 70 cents on the dollar.

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