The Time to Buy: When Everyone Else is Selling

Panic produces great investment opportunities.  As a general rule trying to time the market is not good strategy.  But witnessing calamity is an exception.  I will illustrate with two personal examples.

First let’s look at the September 11th attacks.  The NYSE was closed for four days following this tragedy.  The same was true of NASDAQ.  When markets opened up again the Dow Jones Industrial Average experienced it’s biggest-ever one day drop:  684 points or 7.1%.  However, that week I bought stock.  There was conflict: I felt a little worried that it wasn’t the right move and a little like a profiteer.  But to me it seemed clear that this would not be the end of America.  I was right and made good money on my trades.  I bought 3M (NYSE: MMM) a little above $40.00 and sold it in 2011 for a little above $80.00.  I bought Intel (NASDAQ: INTC) for about $19.00, then sold it in 2004 for about $29-30.00.

Next up is the Financial Crisis.  In 2008 and 2009 we experienced a situation every bit as frightening as 9/11.  But once again I felt this would not be the end of America.  I bought shares of General Electric (NYSE: GE) and Dow Chemical (NYSE: DOW) for around $7-8.00 a share. In 2012 I sold both out, GE around $20.00 and Dow at a little above $30.00.

The economy is resilient.  We’ve lived through many scary things that are now distant memories.  Black Monday in 1987 and The Asian Financial Crisis of 1997 are both now only historical stock chart dips. Even the Great Depression, probably the most horrible economic event in modern world history, would eventually pass.  People who bought stock in high-quality companies during the Depression did well as the market recovered.

When everyone else is selling make some bargain purchases.  Chances are you won’t regret it.  There is always going to be another crisis.  But if you spend your life in fear of such events you won’t make any money.

 

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Articles presented here are general opinions for your own consideration.  They are not specific advice for any one investor.

 

 

Financial Crisis, September 11th

Market Timing