My total portfolio is currently down 25% or so and nearly every stock that I do own looks eerily cheap. I'm inclined to wait and see what this market brings us over the next 3-4 weeks or so, but I also sure don't want to pass up what opportunities are available now. Hansen is trading at its lowest P/E since 2003 even though nothing has changed with the business; you just don't seem to get these opportunities every day! With a lot of stocks in the red it is very difficult not to be tempted into pulling the buy trigger early. Before going too wild, I would review the situation on the stocks that you're interesting in reinvesting in and see what the story is with the valuation, management, etc. A relatively quick look over the numbers and company's situation can never hurt and will go a long way to possibly narrowing your list of potential buys down.
In the past couple years it has been natural for the market to dip in the summer, but past movements don't guarantee a thing and doesn't help us out with when to buy. 2008 has been the worst year the market's seen in quite some time, and probably the only thing that would turn it around in the short-term is better-than-expected economic performance. While individual stocks and the market don't necessarily follow each other, the general market sentiment certainly can have an impact. This is something to keep in mind, although I would say to a lesser extent if you have a long-term investing time frame.
Really what you want to do is whatever you feel comfortable with. I'm still not sure if I'm comfortable jumping in this early in summer so I may wait a week or two before making any decisions. Confidence and comfort are absolutely necessary and important for long-term investors, although I'll admit both have probably hit new lows this year for me. I wouldn't buy anything until the situation has been analyzed and you feel completely comfortable with the company over a 3-5 year basis. In all honesty, if you have a time frame beyond five years, it probably won't make a huge difference if you get in now or if the stock drops a bit in a couple weeks. It's impossible to know what the future holds, so if you see an opportunity that you like, can stand some volatility and hold for the long run, go for it if you're both comfortable and confident. Find the opportunities that you like and decide from there what your strategy is. This is pretty simple advice (certainly not groundbreaking!), but I find that going back to the basic idea of comfort and confidence can make a huge difference in what you buy and when you buy it. It may be different for other people, but for me it certainly has been a positive impact. With comfort in the price/situation of the company and confidence in the prospects, it's extremely difficult to stomach volatility like we've seen in the past couple weeks.
Tags:
economy, hansen, market, opportunity, pencils fund, stocks, strategy
Posted at: 09:08 AM | Add Comment
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