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Are You Buying During Market Corrections?

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Saw this interesting article about people who sold near the bottom of the market in 2008 getting back into the market during the recent and current correction.

The author, Jason Zweig, puts to us that these investors are the 'sheepish bulls.' And there is a cartoon there to boot. I enjoy reading his articles as they illuminate and points to us areas where we probably did not consider.

For example, your risk tolerance as an investor. If you cannot bear the thought of a 40%-50% correction, maybe you should reconsider and think hard about why you are in the market. It is fine to think that a stop loss order should help you limit your loss. But are you disciplined enough to put one stop order each day?

Come think of it, maybe one way for a brokerage to win more customers is to have a weekly or even monthly stop loss order which is in effect until it is lapsed or executed. At the moment, you have to put one each day.

For me, I realised that there is no way for me to predict huge market decrease with any accuracy. So the thing I must do is to make sure that the buy price is good for me.

But sadly for me, this time round, money not enough :) As I am already fully vested.

Moral of the story for me- always have bullets ready. What about you, are you buying?

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3 comments:
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Anonymous said...
March 1, 2011 at 2:40 PM  

Hi,
No, I am not buying. I am trying to sell at a "good" price(profitable). I am slowly withdrawing my bullets to be used somewhere or start to build up "reserve fire power". But very sad, my dividend for this year will be so much lesser compare to 2009 & 2010.

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Emily Jones said...
March 1, 2011 at 3:16 PM  

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AK71 said...
March 2, 2011 at 9:19 PM  

Yup, I am taking the opportunity to load up on some fundamentally strong counter. ;)

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