Do You Have the Guts to be Rich?

When I said in a previous column that I wasn’t remotely rattled by a stock market (DJIA and S&P 500 indexes) that was down just 9% (at the time) from its all-time high, some worried respondents took heart and thanked me for my expression of “grounded confidence,” as one fellow called it.  Now that the market is down roughly 20% from that zenith, some of these same folks are asking me, sarcastically, if I still remain as confident.

My answer?  Absolutely; what’s more…this is the time, one better than any other in a long time, for the prudent, astute, and wealth-seeking investor to buy.

As I’ve noted before, I remain puzzled why stock, in general, is the one commodity that people are all for aggressively consuming when it’s at dizzyingly-high price levels, and just as dedicated to aggressively selling when it’s approaching striking lows.  You would never think of doing that with your house; why would you adhere to such a cycle with stocks, assuming your portfolio is made up of good, solid companies (or baskets of companies, in the case of mutual funds)?  As to my aforementioned confidence, it’s not placed in the belief that the market will soar anytime soon…but in the belief that it will soar again in the future; are you in or out?

The continued pounding absorbed by the stock market has presented you with an opportunity to pick up all kinds of stocks and stock mutual funds at gigantic discounts from where they were perched just a few months ago.  How about Dow 30 representative 3M (symbol: MMM), which is now down 20% from its 52-week high and currently earning a “buy” rating from several well-known industry analysts, including TheStreet.com and Ford Equity Research?  As for mutual funds, I have always felt that the Third Avenue Value Fund (symbol: TAVFX) was a sound addition to just about anyone’s portfolio.  Despite having to be inclusive of the market’s dreadful performance of late, the fund’s average annualized return is roughly 15% per year since inception (1990), and is now…for a limited time, folks…available at a 30% discount from its 52-week high.  I mention these investments not as recommendations, but rather as examples of good, sound equity opportunities…nothing fly-by-night here…available right now for the investor willing to smartly embrace that from which all others seem to be fleeing at present.  Granted, it does take a measure of courage…guts…to walk into the burning building when everyone else is happy to be out, but if you ultimately want to be the hero to your own portfolio, this is how it’s done.

Am I calling a market bottom?  No.  I don’t have a crystal ball, nor do I believe in even wasting much time trying to determine such a thing.  I am an investor, and I am a friend to investors, which means that my consistent focus is on trying to see value within a market, regardless of whether a broad index is itself way up or way down.  Additionally, I would suggest averaging yourself in over the next several months, so that you help insulate your monies from further short-term volatility as you invest.  That said, there appears to be a LOT of value available presently, so if you happen to be one of those IndyMac depositors who now realizes that banks may not always offer the benefit of rock-solid safety to go along with those enticingly low returns, don’t fret…because a better repository for your long-term money can be found today on Wall Street…if you have the guts to be rich.

Agree or disagree; please register your comments below.

Robert G. Yetman, Jr.  Contributing Editor www.ChristianMoney.com
bob@stockmarketincome.com
President of Stock Market Income Advisors
(877) 996-5232