Well I sure am glad that I didn't buy any stock yesterday when the market was down because guess what??? It's down again! But that being said, this too shall pass, and I'm done being negative. Lets try to make lemonade out of lemons if you will.
First off, the most common mistake an investor can make is to sell low and buy high (which the only way to make money in the stock market is to do the opposite - buy low sell high)...so think about what I talked about yesterday...there's so much negativity out there, it seems the stock market will never go up again. Look at the current picture - everything is ugly and negative, fear is palpable, our economy is sluggish, Europe is exploding, the debt ceiling compromise was merely a band-aid on a knife wound, blah blah blah.
Why even buy stocks people ask?? Stocks are bought because at some point down the road we (I) believe that they will be worth more than we paid for them (just like when someone buys a house they believe that eventually the house will appreciate in value). My point is this, now is not the time to be selling out of the market - you don't buy high and sell low. Many people don't understand that when you have a portfolio or an investment account, not only are stocks, bonds and mutual funds investments, but CASH is also an investment holding!
For example, the people I work with have a substantial amount of their total account value sitting in cash; not invested in a stock or a bond or a mutual fund. So now, with the stock market looking and acting as ugly as it is, I have the ability to go out and buy stocks or bonds or mutual funds with the free cash that is sitting in their accounts. Remember, it's just like shopping, would you prefer to buy something when it's full price or on sale??? Stupid question I know.
So despite the fact that today the stock market is down yet again, and it seems as though there is no light at the end of the tunnel, have faith, check your shopping list (of stocks or bonds or mutual funds), because they are being put on the sales rack.
Cash is a wonderful thing to have when the stock market turns ugly - buy low sell high.
