Shares: Buying Price Doesn't Matter

Shares, and when to buy them. This is a short discussion piece about my views on when a person should buy a set of shares. 

Shares Inspiration

Recently, I have been doing a lot of reading about famous investors, what they can teach us, and consequently the best ways to invest. I've read about the greats of Sir John Templeton, George Soros, Warren Buffett, Charlie Munger, Benjamin Graham, Phillip Fisher, and Peter Lynch. Whilst all the investors differed in their particular investing styles there did appear to be a few trends in investment strategy and personality. Since I have previously looked at the attributes of great investors, I will focus this post on the pattern that emerges from these great investors on when to buy a share.

When to buy a share

There was one interesting truth about the price at which many of these investors bought their shares. It seems clear to me that current price is not a determinant of whether to buy or not for many of these great investors.

But how can price not matter?!

What seemed to matter more than current price was where the price was going to move. The movement of the share price is determined in the long run by the fundamentals of the business:
  • Are profits increasing year on year
  • Is the business growing in terms of turnover
  • Does the management have a longterm strategy
  • How tied up are the managements interest into the business
  • Are dividends increasing year on year
Picture from
If the answer to all these questions (and there are many other considerations - feel free to include them in the comments below if you have any other ideas) is positive and you have left room for a margin of error then it should not matter whether you wait for the price to fall a few extra pence to a lower level before buying. You certainly aren't in the investment for the short term (or you shouldn't be) so it shouldn't matter. Most great investments hold shares in a particular company for roughly 5 or more years. If you wait too long for the price to reach a certain level you might miss the boat altogether.

LESSON: You can't time the market, so don't try

The conclusion is simple. Once you've found what looks like a great business and a wonderful investment opportunity don't wait too long to act or you'll miss the boat.

Warren Buffett once said:
It is better to buy a great company at a fair price than buy a fair company at a great price.
Keep that in mind, next time you try to time the market. I know I will.

What other aspects should an investor consider when looking at the business? Does buying price matter to you?

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