To Buy or Not to Buy

After yesterday's drop in the market, it's tempting to consider purchasing some beaten down stocks.   Several stocks have fallen to 52 week lows and some have even fallen to all time lows.  On the other hand, several stocks have hit new 52 week highs and then fallen 10-20%.   Earnings season hasn't been kind to these stocks.

In my younger days, I've typically purchased the stocks near their 52 week low.  However, that strategy doesn't seem very promising at this time, since stocks near their lows seem to keep going lower.  Lately, I've focused on buying stocks that have been advancing and near their highs.   This worked well when I started in early May.  But recently, these stocks have fallen from their highs and some are below my purchase price: oil stocks, retail stocks, and biotech stocks.

Now that I'm retired, I don't have as much time to recover losses.  So I am a bit more cautious.   Articles like Cracks in the bull market: Amazon and 199 other S&P companies now in correction make me think it may be too soon to start buying.

So here's what I will be doing.   First, I am not buying the beaten down stocks near their 52 week lows, yet.  I am going to wait until the pain is so great that there is no hope, and then I may buy some.   Second, I will buy small positions in a few previously "winning" stocks, for example, Nvidia.  Third, I will continue to look for opportunities to take profits or otherwise de-risk our investments.

I still don't think the bull market is over, but I am hedging against the possibility that I am wrong.

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This is not financial, retirement or investing advice. Please consult a professional advisor.

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