The market has had a brutal stretch, and there’s no guarantee that things won’t get worse before they get better.
BUT – there are many companies with strong balance sheets and cash flows that have fallen dramatically in value as investors shun equities and corporate bonds to flee to the safety of Treasuries, even with the bounce-back of Dow’s 900+ point rally today. Wall Street, the saying goes, is driven by fear and greed. Now, the fear has taken over. By historical standards, many companies are cheap. So, is now a good time to buy?
If I were to buy equities right now, I’d be either (1) buying an index fund through a taxable account (mostly likely Vanguard’s Total Stock Market Index Fund), or (2) buying some select companies for long-term investment (Procter & Gamble, Newell Rubbermaid, etc.) also through a taxable account. I’m looking at consumer staples that have smaller exposure to the credit crisis (though it affects everyone) and pay a good dividend.
So, I haven’t decided what to do yet. Chasing a false bottom is a real danger and any money I put into the stock market right now I’m expecting not to touch for at least 15 years. Can I afford this loss of liquidity if I were to be laid off in this dismal job market? If I decide to invest in individual stocks, I’ll also have to research the best discount online brokers to use, and draft an investing plan to make sure that I don’t let my emotions (fear OR greed) take over.
Maybe I will just wait until January, when I can begin funding the 2009 Roth IRA.
*** Please note that I am NOT a financial expert / stock analyst and PLEASE do not make your decisions to buy, sell, or hold equities based on anything in this blog.
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If you have the $$, I’d buy now.
I am going to leave it a bit longer then look at investing in some quality blue chip stocks and they will be the start of my long term portfolio!
I’d wait. Things are just too turbulent for me. However, you do have a lot of cash on hand, so maybe putting a small bit in over a month or two would be a good start to a long term taxable portfolio (is that something you plan to implement soon)?
While the job market is worse than usual, how is your particular job market? That is more important than the overall economy.
Let us know what you decide!
According to my coworker (who happens to be older, wiser and exceptionally good with his money), now is a great time to get a Roth IRA started if you don’t have one already. I’m definitely looking into the possibility and I think it is relatively sound that if you intend on leaving your money in the market long-term this recession will end and for the most part you’ll be making a good profit if you buy now and wait it out long enough. As for me, I’ll probably start up a wee portfolio but I’ll probably keep it rather small.
But this is all hear-say and I’m certainly no financial expert, so take it as you will.
I’m pretty tempted to buy right now, but I’m pretty short on cash. Obviously, it goes without saying, the market is unpredictable. But, lots of people will get very rich from this over-reaction on fear. Historically the next 6-12 months are when the greatest wealth is generated, but damn it’s hard to pull the trigger!!
I’m buying. The minute i can get my money out of my corporation (next year to avoid big fat taxes) I’m putting $5k in the market immediately.
I have also been debating this recently and asking myself the same question. I just finished reading a good book on the subject called “The Big Gamble: Are You Investing or Speculating?” by Jose Roncal and Jose Abbo. It taught me what to look out for when investing.