Don't Let Fear Steal Your Savings

Like everybody else with some skin in the market, I am watching our great national car crash and can't avert my eyes. Lo, though I try.

Writing for The Motley Fool, I should be buoyed up by the buying opportunities that are now placed before me. And I am ... until I look at the value of my 401(k). Like many of our readers, I too am a retired person. My savings are an accumulation of almost 40 years of steady-as-clockwork tax deferred contributions. So, yes, I do get that sinking feeling as I see the market drop 500 points at a time.

But I am able to fight the urge to press the "sell everything" button by remembering that I've seen this before -- in 2008, early 2000s, early 1990s, and 1987. I also remember kicking myself for not buying at those times. I didn't panic and sell, but I didn't take advantage of the situation either.

Some shopping lists
So, even though I feel horrible for those folks that do feel pressured to sell in a fast sinking market, I will not let a good buying opportunity pass me by again. I wrote earlier of my Doomsday List, a watchlist of solid companies, all but one of which pays a dividend. Even though the market is now taking us for a scary downhill ride, I believe those companies will come out fine in the end. In the meantime, they will produce an income stream.

Others at the Fool are also noting advantageous buying opportunities. Selena Maranjian has her list of six strong stocks which are cheap again. Sean Williams wrote about "6 Stocks You Can Buy Right Now." And here are some suggestions from Jeremy Phillips, who says, "The Downgrade Be Damned."

I am considering buying more shares in some stocks I already own -- given the right price, after the Fool's no-trade time limits expire. They are all proven companies with long histories of dividend payments. They include:

  • Waste Management (NYSE: WM  ) -- Even if other garbage haulers undercut its prices, Waste Management will still make money because its rivals pay to dump their trash in its landfills. Waste Management is also the country's largest recycler. Get some cash for your trash with the company's 4.6% dividend yield.
  • Medtronic (NYSE: MDT  ) -- Medtronic is a big player in the medical technology business. The company has raised its dividend, with a yield now over 3%, and is also buying back shares. But there are two problems looming. The first is the potential for smaller government reimbursements for medical devices because of Medicare budget cuts. The second is a possibly litigious situation stemming from the Medtronic Infuse spinal product. However, I still think it is a strong company that can withstand those issues.
  • AT&T (NYSE: T  ) -- The company could become the largest wireless carrier in the U.S. if its merger with T-Mobile passes antitrust muster with the FCC and the Department of Justice. But even if the merger gets nixed, AT&T will still be in a competitive position not far behind Verizon (NYSE: VZ  ) in terms of subscribers. And its 6.2% yield looks very nice.
  • Exelon (NYSE: EXC  ) -- This company generates a lot of power, with more than half coming from nuclear power plants. Decades have passed without any new reactors coming online, and with any plans for new U.S. reactor construction on hold after the Japanese earthquake and tsunami disaster, Exelon's existing reactors give it quite an edge over its competitors. It also produces a hefty yield -- over 5%.

Now, look at how the market tumble affected these companies' share prices:

Company

Price on July 22

Price on Aug. 8

Waste Management

$35.97

$28.20

Medtronics

$37.05

$30.59

AT&T

$30.32

$27.63

Exelon

$43.70

$39.85

Source: Google Finance.

The best advice is ...
Don't panic. Take a deep breath, and stop watching your portfolio heave and sigh every few minutes. Turn off the television. Step away from the computer. And remember those losses you see aren't really losses until you press the "sell" button.

To add the above stocks to your Watchlist, click here.

Fool contributor Dan Radovsky owns shares in Waste Management, Medtronics, AT&T, and Exelon. The Motley Fool owns shares of Waste Management and Medtronic. Motley Fool newsletter services have recommended buying shares of AT&T, Waste Management, and Exelon, as well as creating a covered strangle position in Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that never panics.


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