At a time where stock markets around the world keep going up, investors sitting on the sidelines may feel like they missed the boat.
And they can be forgiven for thinking this.
After all, the major indices worldwide have been making new highs never seen before.
The Nikkei index broke its all-time high after 34 years.
The Stoxx 600 Europe index made a new all-time high since Dec 2021.
The Nifty 50 in India has also broken a new record high.
Not to forget US stocks, and in particular, Nvidia, who has become the new darling of the stock market.
After reporting phenomenal results in its latest earnings, its stock price has reached new all time highs.
The same applies for the major US indices, the S&P 500 and Dow Jones Index, with both making new all time highs.
This makes me wonder whether there are still bargains to be had.
Luckily for us investors, there are (sorry but Nvidia is not one of them).
Some bargains to be had
Many of the stocks that remain undervalued are well known names, members of the famed Mag7.
Alphabet (GOOGL) is one of those.
At an intrinsic value of ~$175, the stock is still undervalued at $144 (at time of writing).
Amazon (AMZN) is another name on my list. At an intrinsic value of ~$195, there is still a margin of safety at $174 (at time of writing).
While I wouldn’t fault anyone for buying at current prices, I would wait for a better technical setup for my entries.
As the intrinsic value of the business changes over time, these technical setups (support and resistance levels) change in tandem.
Both intrinsic value and support/resistance levels must be constantly reviewed and updated.
The important thing to note is that intrinsic value is just an estimate, and not a fixed number.
How I identify buy levels
Now, I am no TA expert.
But I do know how to draw simple support and resistance levels as my buy points.
The only criteria I have is that my buy levels must always be at a price where the stock is undervalued (if not what’s the point).
Buy levels for GOOGL:
Buy levels for AMZN:
I like to have 4 to 5 buy levels, as it gives me multiple opportunities to buy my favourite stocks, should it keep dropping.
This strategy goes hand in hand with my automated investments.
With my automated regular investment plans, I just keep buying without timing the market.
With these buy levels, there is some market timing involved.
So, why do I still try to time the market, when evidence suggests that it is an impossible task?
That’s because in so doing, I know the intrinsic value of the stock, and how overvalued or undervalued it may be.
In case my emotions get in the way of me hitting the buy button, I know that I am still buying through my automated investment plan.
P.S. — If you’d like to connect, I am spending a lot more time on Twitter/X these days. Follow me over there for more investing and personal finance content