LOOK! Did you see it?! If you didn’t no one could blame you because it was really quick and not glaringly obvious. That my friends may have been the correction many investors have been looking for. I don’t know what you guys think, but my own take is that it was a pathetic excuse for a “correction”.
As you can see in the above graph we barely dipped five percent below the closing high at the end of May. If you were watching carefully you may have picked up a few stocks at a discount, especially in the REIT sector. I added a few shares of Realty Income Corp (O) to my IRA, but failed to catch the low on Monday when it briefly dipped under 40.00. Summer is just starting and as we have seen time and time again Mr. Market will freak out at the slightest hint of uncertainty. China economy slowing down? DAMN! Sell everything! Bernanke hinting that the Fed may tighten the flow of money? HOLY SHIT! THE SKY IS FALLING!! RUN FOR COVER!! As fellow blogger Dividend Mantra would say; this is just noise.
I’m really not a fan of buying in a rising market. Sure, I do a bit of dollar cost averaging by making contribution to a 401k, but I’ve developed a preference to do most of my purchasing when people are pessimistic and feel that the world is ending, when the reality is we find ourselves at different points in the economic cycle at different times. That is the rational side of things, however how you felt over the past few years when your retirement accounts were slashed may be an entirely different matter. Watching a sum of cash “magically” lose value in a short time is a sobering experience.
In some ways I feel that it has been a bit serendipitous that I came to investing when I did. At the end of 2010 things were still looking rather bleak. I wonder sometimes if the news is really a reflection of what is going on in the world or merely a reflection of how we feel about what is going on in the world? Don’t get me wrong for those who lost their homes, jobs, and savings thing were bleak, but in every part of the economic cycle opportunities can be found, you just have to be open to the possibility even when you are feeling most vulnerable and your instinct is telling you to run and hide. Being new to investing I didn’t know enough to be fearful and was too bullheaded to listen to those who said, “you’re only going to lose money in this market”, but I’ve always marched to my own tune and felt that because I wasn’t trying to make a killing in the market that I would be just fine; and I was.
With all the news that the housing market is beginning to rise, I feel that it was a good move to enter real estate when I did. Again, I purchased an asset at a discount price and with a lot of hard work ahead of me and the belief that people will once again begin purchasing homes (indeed they already are and have been), I stand to do well on this investment just as I have with equities. I firmly believe that when you buy is just as important as what.
I hope for my sake and yours that the markets will dip a little more and offer us a few more buying opportunities. However, the real deals will be found when everyone else is convinced the world is ending. It’s only a matter of when, not if. Patience is indeed a virtue.
What do you feel more comfortable with? Investing during the up trend or the down trend? Leave me a comment. I would love to know your thoughts on this.