It can be fairly easy to analyse a business using qualitative or quantitative data, depending on your analysis process. However, it's much harder to know when to actually make a purchase.
If the share price is falling and has been for some time, then it could be possible that the market may send that share price even lower.
So, when should you buy?
There have been several examples in recent times of perfectly decent businesses where the share price keeps getting lower and lower, like TPG Telecom Ltd (ASX: TPG), Telstra Corporation Ltd (ASX: TLS), Vocus Group Limited (ASX: VOC), Greencross Limited (ASX: GXL) and Select Harvests Limited (ASX: SHV).
It would have quite easy to justify a buy when all of those share prices were much higher than they are now, yet the share price just kept falling. I think the main thing to remember in that scenario is that you thought the share price was good value when you bought and you don't have any control once you've pushed the buy button.
If you're right about the long-term prospects of the business, then eventually the share price will follow the success (or failure) of the business.
However, I think it's also worth bearing in mind that although shares are indeed businesses, the share price can vary significantly from the business performance. If a share price is going downhill, then it might be worth waiting until it has 'bottomed out'.
An investor that was truly patient with Vocus could have waited until the share price had dropped below $3 and investors could have waited until TPG went under $5. It's hard to have patience, but I think it's the key aspect for investors to achieve the best returns they can.
When the share price has finally stopped falling and there's no more bad news, that could be the best time to buy, even if you don't hit the lowest price. At least you didn't have to see the share price fall another 10% or more.
Foolish takeaway
At the current prices I don't think TPG, Vocus or Greencross are going to go any lower than they currently are, so if you want to add them to your portfolio then I think now is a good time to buy, particularly with Greencross.
