The first quarter of 2022 was a turbulent time for stock investors. The S&P 500 dropped almost 10 points to begin the year, before falling again in February. While the second half of March saw some recovery, the index is still down this year and there are few signs of positive momentum as we head into the second quarter. It’s leaving many asking a simple question: is now a good time to buy stocks?

If you’re looking to buy and hold positions long term, now’s a great time to invest. That said, you need to review the current factors driving the market so you can make value investments and smart decisions that weather the turbulence that’s still sure to come. It starts by understanding why now is a good time to buy stocks and which companies, sectors and industries are good long-term investments. 

Here’s a closer look at the macro factors controlling the market in the second quarter of 2022 and how to navigate them tactfully, to invest in stocks with confidence. 

Is now a good time to buy stocks

Inflation is Rapidly Devaluing Cash Positions

Far and away the best reason to buy stocks right now is to hedge against historic inflation. According to the Bureau of Labor Statistics’ (BLS) Consumer Price Index (CPI), inflation reached 8.5% in March: an astronomical figure not seen since 1982. This, on the heels of three straight months of inflation growth exceeding 7%, dating back to December 2021. 

As inflation rates climb, the purchasing power of the dollar drops. This makes investing imperative. If your money isn’t making money for you, it’s actively losing money due to inflation. For perspective, if your investments didn’t deliver a return of at least 8.5% in March, you effectively lost money. It’s a daunting prospect when you think about not only wealth generation but also wealth preservation

It’s virtually impossible to achieve ROI of 7% or more on any investment other than equities. Case in point, now is a good time to buy stocks. Putting money in low-yield investments, or worse, not investing, means losing money every day. 

Stocks Available at Reasonable Valuations

One of the criticisms stock investors have faced over the past 24 months is the idea that the market as a whole is overvalued. Historically, the P/E ratio of the S&P 500 hovers between 13 and 15. In 2021, that ratio ranged between 25-30. Other fundamental valuation metrics yield similar insights, signaling a market that’s exceedingly expensive.  

Now, in 2022, markets have appeared to regress toward a more nominal valuation. This is largely because many growth stocks have shed some of their premium. To put in perspective how out-of-control some valuations had become in 2021, consider Block (NYSE: SQ). Over the past 52 weeks, the company’s stock price has been cut in half, yet it still maintains a P/E of more than 400! Many other tech stocks suffer from excessive valuation; however, they’re beginning to deflate in 2022.

Now is a good time for investors to open long-term positions in companies at reasonable valuations. Companies like Zoom (NASDAQ: ZM), Coinbase (NASDAQ: COIN) and Shopify (NYSE: SHOP) have all fallen 50% or more in the last 52 weeks and now hover around valuations in-line with reasonable sales and revenue figures. If you’re investing for the future, now’s a great time to buy.

Use the Resources Available to You

If you’re worried about volatility, you’re not alone. The major dips in the market this year have come in bearish waves and headlines have all but decreed an impending bear market. It’s times like this that Warren Buffett’s most-spouted piece of wisdom becomes most relevant: “be fearful when others are greedy; be greedy when others are fearful.” As the market flounders, have the patience to look for value plays and companies with strong fundamentals. 

The best way to do this? Use the resources available to you. Sign up for an investment newsletter or two. Listen to podcasts or tune into investor roundtables. Read up on recent news about companies you’re intrigued by. The internet is awash with information; it’s up to you to put the pieces together in a decision that you feel confident in. 

Is now a good time to buy stocks? Yes, if you do your due diligence. Speculative investing isn’t smart during times of turbulence or uncertainty. And while it might seem like market has abandoned rationality, rational investors will win out in the long term. Just make sure your thesis isn’t tainted by bias and accounts for current market forces. 

Now is an Important Time to Invest in Stocks

Is now a good time to buy stocks? Absolutely! Just be careful about what you buy. Trying to jump on a rising stock could leave you holding the bag when institutional investors take profits. Likewise, betting too niche could see your investment become smothered by strong market headwinds. 

Where should you look for investments? Start with what you know and keep an eye out for ubiquitous recommendations from trustworthy sources. Now is a good time to buy stocks if you believe in the company’s long-term viability, and if you’re confident future gains will be enough to offset the current losses you’re likely to incur through inflation and market volatility. 

Still not sure where to invest your money? Start with low-to-no-fee ETFs or mutual funds. Diversify and avoid fees wherever you can, and let compound interest work in your favor. To quote another famous concept, “it’s not about timing the market, but about time in the market.” Start investing today.