My addition to the Third Option would be: if you know something’s a good company, wait until a cyclical (but fundamentally extraneous to the company’s business prospects) market downturn and buy it while everything is crashing.
This assumes that you can generally beat the market by buying stocks when you think there a market downturn and selling them when you think the market as a whole is high. This assumes that the efficient market hypothesis is wrong on a fundamental level.
Well, the Efficient Market Hypothesis is wrong on a fundamental level—its stated conditions for market efficiency often fail to prevail in the real world. Panics are one of those times, and being more rational than other people is not a free lunch, but in fact a Substantial Effort for Good Return Lunch.
(I’ve seen one paper actually proving, rather humorously, that EMH is completely true IFF P = NP.)
This assumes that you can generally beat the market by buying stocks when you think there a market downturn and selling them when you think the market as a whole is high. This assumes that the efficient market hypothesis is wrong on a fundamental level.
Well, the Efficient Market Hypothesis is wrong on a fundamental level—its stated conditions for market efficiency often fail to prevail in the real world. Panics are one of those times, and being more rational than other people is not a free lunch, but in fact a Substantial Effort for Good Return Lunch.
(I’ve seen one paper actually proving, rather humorously, that EMH is completely true IFF P = NP.)