I've been studying investing and finance for about a year now, trying to get ready to start allocating my money, and one thing that's come to mind during my studies is the maxim buy low and sell high. That is the idea that a component of any given stock being a good deal is dependent on its selling price.
With that in mind, given one's job is secure, a recession seems to me like a good time to invest. With a company like say, 3M, dropping to a very low price per share, it would seem like a great opportunity to put a sizable chunk of money toward such a strong company, and then hold onto the shares until the market stabilized again.
I've read a lot of advice against speculating like this, but if there was ever a time to do it, when everyone else is selling seems like an ideal time to do so.
So this brings me to a few questions:
- What are the risks here that I'm not seeing?
- Is this a common practice? And if so, how would one identify a good company to invest in?