Now that the stock market is heading South, does “The Fool” have any suggestions for someone who has several thousand of dollars to invest?
Most of us would suggest holding your cash (in Money Markets) until the market bottoms. Some very good quality stocks are now on sale at good prices. Pick out your favorites, keep an eye on them, and be ready to pounce when the bottom is established.
abover96,
As a thought, peruse the following in going on the D’Fence via the Tetter Totter Principle.
The SPXL / SPXS / SPXU should be on the top of your list.
https://discussion.fool.com/tyme-has-come-today-in-beating-the-m…
Quillnenn -
Dear Sboyer96:
I’d wait and see how this war plays out. The market is very volatile now and you could lose a big chunk of your investment in a matter of days even in the best of companies. My own experience was not to panic but be prudent with your money too.
Regards,
Jaack
going south? must have made a U-turn at the mason-dixon line yesterday.
going south? must have made a U-turn at the mason-dixon line yesterday.
https://www.youtube.com/watch?v=Y3e-BNLYrMU
Enjoyed the music, but that is a skinny dude, not a fat lady.
Futures will be interesting tomorrow and Mondays action even more so. There’s no cyclical bear in history that went straight down (just feels like it) and it’s been a very fat kitty that has been falling so may bounce a bit.
Personally, will continue watching my step, but to each their own.
LakeDog
Nobody knows exactly what the market will do, we can only look at it’s history and try to make educated guesses.
2 Likes
Hi, sboyer96.
There seems to always be someone signaling that the sky is falling and a market crash is imminent. They are like vultures who prey on fear. Personally, I think the Pandemic recession 2 years ago was worse than this has been, but I expect the inflationary pressure and threat of an expanded European war has everyone on edge. But for Fools, a market downturn, crash, correction, whatever chicken-little term you want to call it, is an opportunity.
For many Fools, the best defense is a good offense. If you have a cash reserve handy, you can add to your positions in the companies with which you have the highest conviction, or tapping your Buy Watch List. Having a cash reserve is not sexy, and some Fools think they have to put all their money to work. But the opportunity cost of not having a cash reserve can be bigger than the the benefits of being fully invested.
One option is to build a Buy Watch List divided into four categories. First, there are the Must Haves, companies in which you have deep conviction and absolutely want in your portfolio. Second, there are the Strong Haves, companies in which you have strong conviction but wouldn’t just totally die if, like, they weren’t in your portfolio. The last category is the Nice Haves, companies in which you have positive conviction but aren’t especially excited over. The last category is Never Haves, those companies you just flat out think are wrong for you.
Then, when the market opens the door of opportunity, you are ready to step in.
One unofficial rule many Fools follow is buying in thirds. Let’s say you want to purchase about $2500 of a company. You could buy $1000 now, then another $750 on a future dip in price, again the final $750 down the road when the price is again at a discount. Market downturns can present golden opportunities for adding another third.
Possibly the most important message I could try to convey is to remove emotion from your investment equation. Decisions to buy or sell a position should be proactive, not reactive. This means your decisions are based on a researched watch list, specific news and opportunity, not in response to day-to-day movements of the market or explosive but not necessarily meaningful events affecting a company’s future promise.
Fuskie
Who notes the best defense is often a good offense and this plan lets you invest pro-actively whenever the market presents discount opportunities, rather than scrambling reactively…
Premium Home Fool: Ask me a Foolish Question, I’ll give you a Foolish Response!
Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), Virgin Galactic (SPCE), Axon Technologies (AXON), 51Jobs (JOBS)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disassociation: The views and statements of this post are Fuskie’s and are not intended to represent those of The Motley Fool or any other sane body
Disclosure: May own shares of some, many or all of the companies mentioned in this post: https://tinyurl.com/FuskieDisclosure
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu…
Invitation: You are invited to interactively watch Motley Fool Live online television: https://www.fool.com/premium/live/
Call to Action: If you like this or any other post, Rec it. Better yet, reply to it. Even better, start your own thread. This is YOUR TMF Community!
1 Like