Sunday, July 17, 2011

Expect a Buying Opportunity Soon

Although the stock market hasn't declined much, I expect up to a 20% decline in July.  Given the state of the debt ceiling discussions, I believe all solutions will lead to the same outcome - disappointment.  As a result, there will be a steep decline in the stock market.

 After a 20% decline, I plan invest 10% of our retirement account back into stocks.  After that I will reinvest 15% for the next 10%.  Then I will reinvest 20% for each succeeding 10% drop.  So if the market drops 40%, we will be 45% back into the market.  Past 40%, I probably don't have the courage to continue to reinvest.

I will buy primarily good dividend paying stocks of strong companies, e.g. Dupont, Phillip Morris, Intel etc.

My hope is the decline will be short and deep followed by a recovery in 2012 as the government finally takes the right steps to regrow the economy.

Disclosure:  At time of publication, our trading accounts have a position in Phillip Morris.
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This is not financial or investing  advice. Please consult a professional advisor.
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