A Little Secret--Keep Buying!

As a self-certified finance geek, I’ve had the pleasure of receiving various comments, concerns, and frustrations about your portfolios (stocks, bonds, real-estate, etc). No offense to anyone out there, but it amazes me how little faith we have in our decisions. Most of my portfolio is down 35% or more and guess what I’m doing: BUYING! The S&P 500 Index Fund is as low as it’s been since 2003. Most individual stocks are at 52-week lows at least—some are trading at 5-year lows. Current headlines from around the world say it’s true: WE ARE IN RECESSION!!! Guess what: Big deal.

When stocks go down—I buy more. When stocks go up—I smile and continue buying.

The reasons to continue buying are simple: (1) The markets will rebound and those who kept buying will be handsomely rewarded, or (2) The world will end. P.S. God doesn’t care about money and neither will we.

I receive Kiplinger’s Personal Finance magazine every month and really enjoy the content. Editor and Chief Knight Kiplinger made a few comments about our current situation that I definitely agree with:

“A few years from now, we’ll look back on this grim period as one of the greatest buying opportunities of our lifetimes.”

“The hardest thing for an investor to do is to go against the crowd, to keep a cool head when other investors are losing theirs. Perhaps a few years from now, I’ll regret acting on the confidence that I still have in the resilience and ingenuity of the U.S. economy—indeed, the global economy. But in the last 40 years of patient investing, I haven’t been disappointed yet.”

“The minimum horizon for anyone investing in stocks is five years. If your horizon is closer, you should tilt more heavily towards bonds and cash.”