Buying Stock In A Poorly Performing Market Correction
March 2, 2009 5:45 pm GeneralOne of the scariest things to be doing in this current economic environment is to be buying stocks. When you look and see all of the instability in the economy and the markets, it becomes really tough to make a decision about which stock to buy. This happens to normal and professional investors alike. Fear of making a mistake keeps many people out of the market which causes them to not be buying stock precisely when they should.
To illustrate this case I will reference the 1982 stock market. At the beginning of 1982 the United States was at the deepest point of a recession that had been off and on for the previous 10 years. So many investors had been burned by buying stock too early in that market that they were unable to buy during that year which was the precise spot when they should have been buying. If they had bought in 1982 and held over the next 25 years, their average return would have been well over 15% a year! However, I have spoken to many stock brokers who said that when they called their clients during that period recommending they start buying stock, they would get laughed (or even cursed) off the phone.
To contrast that situation, fast forward to 1999. At that point the world economy was booming and the “dot.com” craze was in full force. It took almost no convincing for most individuals to be buying stocks left and right based on random tips from almost anyone. This type of irrational stock buying defines the peak of a market. Since that period of easy stock buying, average market returns have actually been negative!
So we are aware that it is better to buy at a stock market trough then at a peak. Easier said than done, I agree. The problem arises with our own mentalities and thought processes. There looms a fear in us when we try to do something that goes against the crowd. We always know that there could be some pain in buying stocks and investing for the long haul, however we really fear the double pain of being wrong because we were doing what everyone else wasn’t.
A good illustration of this statement lies in the recent housing market boom and bust. Many of us (myself included), experienced a great amount of pain when others around us were buying houses and turning around to sell them at ridiculous profits. We thought that we too should be making this kind of money, and if we didn’t, we were somehow going to look like idiots for missing out on the opportunity of a lifetime.
While our rational selves knows this isn’t true, nevertheless this kind of mentality swept many people away from their good judgment and convinced those folks to (what would have been considered 5-10 years prior) overextend themselves financially. This is also true in the reverse. Just as these people couldn’t put up with the apparent pain of sitting out the housing market, many people won’t be able to put up with the pain of getting into the market – just when they really should!
So what do you do right now when buying stocks is hard but you know you should be? You find the absolute best stock buying picks you can that’s how! Read more at (Stock Buying Advice) to become aware that there is hope in this current situation and you can actually make profits off your stock buying right now!
——————>>> Why Buying Stock Now is so Important!
