Move Away from the Herd OR Let the 632 Loss Be Your Gain.
Like many of you, I'm unhappy with events in the stock market the past few weeks, and especially last Thursday and today.
While I may not be thrilled about the current volatility, I am in nowhere near a state of panic. In my 2o-year adult lifetime alone there have been innumerable instances when there was panic about the stock market, but each one turned out to be opportunities for smart investors.
Wiser souls, and my own experience, have taught me that whenever there is panic, there are even greater opportunities.
My optimism may seem to be coming too closely on the heels of the hard times of 2008 and 2009. However, looking at market behavior, we are a LONG way from the depths of March 2009. The S&P 500 is up more than 75% since then, and many stocks & funds are up even higher.
I am an entrepreneur and business man, not an economist, Wall Street analyst, or a financial advisor. Nevertheless, I know enough about the market to know that it is common for a pause or decline to occur after strong performance. I see the same in business. It is the nature of the beast. Unfortunately, we just never know when the pause will occur, and for how long.
Wiser souls, and my own experience, have taught me that whenever there is panic, there are even greater opportunities.
I am an entrepreneur and business man, not an economist, Wall Street analyst, or a financial advisor. Nevertheless, I know enough about the market to know that it is common for a pause or decline to occur after strong performance. I see the same in business. It is the nature of the beast. Unfortunately, we just never know when the pause will occur, and for how long.
Despite the emotion of the past week and today (a.k.a. the moment), there are some objectively positive factors. Most recently, Friday's jobs report was surprisingly positive. As someone who runs a job board, I know there is a long, long way to go on the jobs front. Still, it was nice to see a higher-than-expected increase in jobs numbers. Another great piece of news: corporate profits are strong. Really strong. Forgive the investor-speak, but quarterly corporate earnings have exceeded expectations, and aggregate corporate earnings & revenue are up more than 13% over the last twelve-month period. Companies are holding enormous amounts of cash, with many buying back their own shares and increasing their dividends. When you combine good earnings with decreasing stock prices, it usually spells opportunity.
Do your best to take advantage of the opportunity to buy good stocks at attractive prices, which is the opposite of what the herd is doing right now.
At times like these people often ask, "What do we do now?" As frustrating as it may seem, this is not a time to make moves based on the emotion of the day. This is a time to resist the sirens who are singing, "sell, get out, run for cover."
Now is a great time to look for opportunities, and stay the course.
