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.
Copyright © 2011 Achievement Catalyst, LLC
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