Friday, October 10, 2008

Is The Bottom Near?

This was a wild week. A record one week drop in the Dow. And prices moved dramatically from hour to hour. Fear and Panic were high.

Fortunately, I started the week with only 7% of my money in the stock market (perhaps 7% too much). Today I added significantly (6% of assets) to my stock position as the market hit new lows. This combined with small additions earlier in the week doubled the size of my stock portfolio to 14% of my investment assets.

I would not be surprised to see the Dow bottom somewhere around 7,000. However, I do expect at least one good rally in the last few months of this year. It is not realistic to pick the absolute bottom amount or timing. But I do believe stocks will be much higher a few years from now, and I see the current market panic as a buying opportunity.

Having removed most of my money from the market before the declines began, I am now buying back in on the dips to dollar-cost average into this low period in the market.

4 Comments:

At October 11, 2008 6:29 PM, Blogger Funny Circus Bears said...

I started buying this week as well. I've got a nice position in BAC with an average price of 19.78, among others.

I also took a small speculative position in XOM when it hit 56.xx yesterday. If it goes against me I will dump it.

What else are you buying?

 
At October 21, 2008 1:21 PM, Anonymous Zephyr said...

The specifics of what I bought are: more BAC, USB and XLF, and I added some SPY and a little KBH.

 
At October 21, 2008 8:40 PM, Anonymous Anonymous said...

Do you have an opinion as to the safety of the KBH div?

 
At October 23, 2008 10:47 AM, Anonymous Zephyr said...

I do not have an opinion on the short-term outlook for the dividend. Stocks with higher than average dividends do tend to perform better than other companies in times like today. However, my bet on KBH is like my bet on the stronger financials - and that is that these companies will be very profitable a few years from now, and that we are in a window of time where the prices for these stocks are very cheap compared to what they will rise to after the economy recovers.

We may very well see lower prices before the rise comes. But predicting the best day to buy is is not realistic. So I am dollar cost averaging into this low market. I have only put a small share of my money back in so far.

 

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