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A lot of people want to start buying shares at some point but are never quite sure when to begin. If prices seem too high, they worry that maybe it is not a good idea. But if prices fall significantly, fear can set in.
Actually, that is not just a problem for stock market beginners. Many experienced investors also spend a lot of time trying to time the market.
But the reality is that nobody knows what will happen tomorrow in the stock market, let alone further ahead. Sitting out of the market hoping to avoid turbulence might work on some occasions, but at other times it can mean missing out on brilliant opportunities.
Looked at like that, there may not be such a thing as a good or bad time to start buying shares – and even if there is, that may not be apparent until after the event.
Rather, I think it is better to think in terms of buying specific shares. Even though the FTSE 100 index of leading shares hit an all-time high earlier this year, I continue to believe some British shares look like good value.
Start as you mean to go on
The question, for new and experienced investors alike, is: what ones?
That can be even harder for a new investor to decide, as they do not have the same experience when it comes to things like avoiding value traps and constructing a properly diversified portfolio.
For that reason, I reckon it makes sense for someone to err on the side of caution when they start buying shares for the first time (though that can be a good principle for investors in general too).
That means sticking to large companies with proven business models, attractive valuations, and clearly understood risks.
On the hunt for bargains
As an example, one share I think investors should consider is consumer goods maker Reckitt (LSE: RKT).
Is this the most exciting share on the London market? Not in my opinion. Do I think it will be the best-performing FTSE 100 share of the coming decade? I do not know, but consumer goods firms are generally not the highest growth shares over a sustained period.
So what do I like about Reckitt then?
For starters, the markets it serves are large and resilient. People want hygiene products to clean their home today – and I believe that will still be true decades from now.
Reckitt has strong brands like Finish that give it pricing power, setting it apart from unbranded rivals. It has an excellent distribution network and a proven business model.
Recent years have been tough partly because of a disastrous nutrition business acquisition. I see further risks ahead, such as the potential for lawsuits relating to some of the firm’s products. That has been a problem in recent years.
But at its core I see Reckitt as a solid business with attractive long-term commercial prospects. The share price is now 22% cheaper than five years ago and I think it potentially represents a long-term bargain for a company of this quality.
