Is it a good idea to buy a stock in a bull market?

Answer 1

This is a great question since it makes us reflect on the important topic of timing a stock purchase. One of the worst possible outcomes for an investor is to buy a stock only to see it immediately start declining. Since most stocks generally go up during a bull market this is the time most investors are inclined to put their money into stocks. During bear markets, the opposite happens and like clockwork many investors sell out as prices drop, providing evidence that many investors are their own worst enemy when it comes to investing.
The concept of buying during bull markets makes sense on an intuitive level but how does that square with the unarguable wisdom of Warren Buffett who tells us to "be fearful when others are greedy and be greedy when others are fearful?" The inherent difficulty with attempting to construct a theory on the best time to buy or sell is due to the fact that no one can predict when a bull market or a bear market will end or begin. Waiting for others to become fearful can be a self defeating strategy since bull markets can last many years and during bear markets many investors will lack the long term conviction necessary to buy as stock prices decline. Instead of trying to predict the best time to buy stocks a better strategy for most investors would be to consistently invest some money each year in a broadly diversified low cost stock fund.

Answer 2

Buy individual stocks is always risky regardless of bull and bear markets. Better to invest in exchange trade funds, ETF's, to diversify risk.