So far today, the market is down around 1% on not much negative news. The only real news I've come across is word out of Iran that if the global community decides to invoke sanctions on them, then they are ready and willing to shutdown all oil shipments thru the Strait of Hormuz. I mentioned this yesterday, and if this were to happen, the price of oil would rise and therefore this would be another headwind that would have a short term effect on the global markets.
I've finally decided to add to some of my stock holdings this morning, as two of them have moved down in price for no reason what soever. This sort of thing happens all the time, which is why it's always important to be prepared to dollar cost average any stocks you may own. To explain what this is, dollar cost averaging means that if you buy 100 shares of a stock at $10/share and then it trades down to $8/share, you can buy another $100 shares at $8 and therefore your "cost basis" is now $9. If you do this and it trades back up to $10, you don't break even on your initial investment but you would actually make $1/share. If I don't make money on an initial investment, and there isn't any bad news that has come out on the company, I usually always dollar cost average because I hate buying a stock and then selling it for a loss (sometimes this does happen if bad news comes out on a stock).
This morning, the two stocks I've decided to add to are Etrade (ETFC) and Suntrust Financial (STI). Both companies are extremely undervalued not to mention both companies are well position to benefit from the ongoing growth in the economy, not to mention that I believe both will be acquired by other companies early next year. While I don't necessarily expect both of my stock buys to immediately make me money, they will lower my overall cost basis and therefore when they are acquired or they benefit from the economy, I will make more money than I originally would. I just picked up some Etrade at $7.30 and some Suntrust at $17.04. I didn't buy much as I'm allowing myself to further dollar cost average if the market continues to sell off.
As the wise man once said, we shall see....
