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Is This a Buying Opportunity?

by Flexo on February 28, 2007

in Investing

If I were a trader, I might look at yesterday’s drop as a buying opportunity for today, but with a long term view, it won’t change anything that I’m doing as far as investing this year.

Former Federal Reserve chairman Alan Greenspan thinks we’re heading for a recession this year. This is not long after the Dow was setting record highs.

With the markets tanking a bit yesterday, have your investing plans changed? Was this the sign of a correcting trend or just a short-term blip?

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Flexo, the owner and creator of Consumerism Commentary, has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow him on Twitter.

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  • Adil
    I have been sitting on cash for the last 4 months exactly because I knew something like this was inevitable. Stocks are just too expensive at the moment and have been driven up by speculators. This correction is not over by any means, in my opinion.
  • tmg
    I own a lot of company stock, and it lost at least $10k in value in the past week, but I'm not worried at all. Whether a correcting trend or a short-term blip, I take the long, long view on all my investments and believe I'll come out on top in the far future.
  • I believe Adil is incorrect. How do you gauge what's an expensive stock? The last bear market started when stocks were trading at an average of 26 times earnings. As of Monday they were only trading at an average of 16 times earnings. Historically, that's a low number.

    I see this as a blip. Merely a pullback from 14% gains we've seen since July.
  • Phil
    I'm about to change jobs and will have to roll over my 401k balance. I'm worried the market drop means this is bad timing for me. Will rolling it over have the same effect (not considering taxes and penalties) as if I'd pulled my money out?

    pt
  • klerg
    I say BUY BUY BUY!!!

    Or at least, put some money into one of your retirement accounts!
  • That's exactly what I have been thinking in the last 10~12 hours. I emailed a few investing-intensive blogger friends asking for their recommendation....sadly, they didn't encourage me much. They said something to the tune of what Kevin says above. :)
  • I wish I could go nuts and buy like crazy. But I'm sticking with my mutual funds for now. It's interesting. I took nary a hit in my rollover IRA from one company, and took the same 4% dip as the market in my current 401k plan. Makes me wonder if I should model my portfolio to the rollover IRA. (which has had admirable performance over the last three years, averaging over 15% for 4 funds.)
  • I think that Kevin and Adil are actually agreeing to some extent. Adil notes that stocks have been driven up and Kevin says it's a pullback from the 14% gains we've seen lately. It was bound to happen. Things may go up or down 3-4% in the short term, but in the next two years, I think we'll be at above.

    I'd look for companies that you like at a price point you like. I don't think the fundamentals have changed, so you it's really just a sale.
  • I think we are head for recession and the credit bubble will be bursting.
  • Bobby
    Personally I am not planning on changing anything. I am in for the long haul...
  • Jerry
    I've been waiting until April to fund our Roths, but I'm tempted to do so tonight. I doubt it'll make that big of a difference with the $$$ amount that we're putting in but every little bit helps.
  • Sun
    I'd say Buy, Buy, Buy as well and that's exactly what I did: I added nearly $6000 more yesterday and today. If I am a long-term investor and plan to hold my investments for 10, 20 years, why would I care a 4% drop in one day and see it other than an opportunity to add more shares at a relatively lowered price? I won't be all my money on it, but I am not going to sit idle while speculating when the correction, if there's one, will be over, which I will never know. By that time, it's probably too late to buy low.
  • I would definitely invest. Buy low, sell high
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