The Downgrade Be Damned: Here's What I'm Buying Now

On Friday, Standard & Poor's told us something we've all known for years: The U.S.' debt situation can no longer be ignored. The anticipation of this and other uncertainties has wickedly knocked the Dow down 1,200 points in the past two weeks, and it is showing no signs of stopping as the market sold off another 600 points on Monday.

Today I'm telling you why none of that matters to enterprising long-term investors, and I'm letting you in on my personal plan to take extreme advantage of the situation.  That's right -- I'm taking clear, specific actions with my own money this week, and I invite you to follow along.

Ignore the noise
As the market absorbs the story beyond Monday's brutal sell-off, we're already seeing dozens of so-called experts touting the "fall of America" and other nonsense, but they rarely put actions behind their breathless words. Unleashed from accountability, and taken in aggregate, they really are paralyzing, even to seasoned investors. This has always been the case, and will continue to be, but please join me in rising above this nonsense.

As an example, I recently came across this startling headline in the Boone County Republican:

A BANKRUPT NATION.

United States Almost a Mendicant in Money Centers.

Republicans have had no part in the great drama of national dishonor -- Democrats unable to fill their contract.

Sound familiar? The U.S. becoming a monetary beggar? I thought so, too. You and I have been hearing it our entire adult lives. I'm certain of this because this headline happens to be from the paper's Feb. 27, 1895 edition. According to the "experts," America has spiraling downward each and every year for 116 years since that was printed. The criticism will continue in perpetuity, so it's really pointless for us to make rash moves as a result.

Now is the exact wrong time to panic. No one really knows where the market is going to close this week, but that genuinely does not matter. You shouldn't invest the cash you'll need in the next five years in the stock market, but everything else, with some variances based on your specific situation, should be considered fair game.

What feels right can be wrong
Your instincts (and many commentators) are going to tell you to hold off buying stocks until there's greater certainty or worse, to retreat to the safety of cash. I'll let you in on two facts that have also repeated themselves throughout history:

  1. There will never be a time of complete certainty.
  2. There's no safety in keeping your investable assets in cash.

Earning a mere 1% while your cash languishes will not only have you losing real spending power to inflation, but could also push your retirement back by as much as a decade -- if you get to retire at all. Where's the safety in that?

For a happy and secure retirement, you and I both are going to need the long-term, proven returns of the stock market. Despite how uncertain the world may seem, now is the perfect time to act. That's why I'm putting 10% of my investable cash in the stock below, no matter what happens this week.

And if the market continues to drop further, I'm making a commitment to you that I'll unleash another 50% of my investable cash. That's how confident I am in the long term, but more on that 50% in a minute.

Here's what I'm doing this week
I'm buying a worldwide company with an extraordinarily long history of rising above short-term turmoil, and rewarding shareholders with ever-increasing and reliable dividend payouts. This gives me outstanding geographic diversification, almost-guaranteed payouts through any short-term uncertainty, and money-market-thumping growth on my income.

Question: What's worse than an AA+ credit rating? Answer: The Great Depression
Back to 1895, when a certain newspaper called the United States "a bankrupt nation," another event quietly began occurring.  In that year, Colgate-Palmolive (NYSE: CL  ) began paying dividends on its common stock, and that has continued, 100% uninterrupted ever since. That's strong -- two world wars and a Great Depression strong, in fact. Add in that it has increased its (currently 2.8%) dividend in each of the past 48 years, and that its revenue sources are spread almost evenly around the world, and you have a great, diversified brand that I'm proud to own.

The safest place for your cash
Back to "finding safety in cash," as the pundits call it. Here's what $50,000 looks like parked in cash versus what Colgate's dividend alone could return over the next 30 years, assuming it does roughly what it's done over the past 48 years.

Source: Author calculations.

And that's before any (extremely likely) share price appreciation over that time period. I really don't see the safety of cash in this scenario.

Outperforming expectations
Despite beating Wall Street analysts' expectations in its latest earnings report, Colgate's stock is slightly down with the market since. That's actually great news, as we can now buy the same company, and the same rock-solid dividend history, cheaper than we could before.

This story is actually being replicated throughout the broader market. Roughly 77% of the companies in the S&P 500 have beaten analyst estimates this earnings season, yet the market is down more than 1,200 points. That doesn't make a lot of sense, does it?

If Colgate isn't what you're looking for, here are four similar companies that recently beat analyst estimates, have impeccable dividend histories, and have declined over the past two weeks:

Company

Dividend Yield

Paid Uninterrupted Dividend Since

Price Change Over Past 2 Weeks

United Technologies (NYSE: UTX  ) 2.6% 1936 (15.5%)
IBM (NYSE: IBM  ) 1.7% 1916 (6.6%)
Chubb (NYSE: CB  ) 2.6% 1902 (7.5%)
VF Corp. (NYSE: VFC  ) 2.3% 1986 (7.6%)

Source: Yahoo! Finance, as of Aug. 5.

60% of my investable cash on the line
As you can see, there are many great companies that have declined despite beating expectations, and I'm picking one of them, Colgate, for 10% of my investable cash. The Fool's trading restrictions require that I wait two days after this article is published to make my buy, but as soon as that's up, regardless of what happens with the market this week, I intend to load up on shares of Colgate. This is primarily to illustrate how little I care about what happens to the market this week, because I know just how small of an impact it has over the long term.

But I'm not stopping there. If at any point in 2011, the market falls another 15% from where it closed last Friday, I will invest another 50% of my investable cash in a handful of stocks, and of course, I'll write an article in this space before I do.

Worried about a further market drop?
If you think the market could drop another 15%, you can get a head start on my research right now. One of the stocks I'm seriously considering has similar attributes as the stocks above and is discussed in detail in The Motley Fool's most popular free report ever. It was named by one senior retail analyst as "the dividend play of a lifetime" and is joined in the report by 12 other outstanding dividend payers.

More than 300,000 investors have requested access to this special report, and today I invite you to download it at no cost to you. To get instant access to the names of these 13 high yielders, simply click here -- it's free.

Jeremy Phillips owns no shares of the companies mentioned above ... yet. The Motley Fool owns shares of IBM. 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.


Read/Post Comments (33) | Recommend This Article (150)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 08, 2011, at 2:35 PM, jimmy4040 wrote:

    CL is a good company no doubt. Have you checked what portion of their revenues come from Europe? If it's a significant number, better wait. The S&P story is not nearly so important as the possible black swan in the euro zone.

  • Report this Comment On August 08, 2011, at 3:38 PM, TMFMoby wrote:

    Hey jimmy4040 - thanks for the comment. About 20% of their revenue comes from Oral, Personal, and Home Care Europe/South Pacific segment.

    Around 27% from Latin America, 19% North America, 19% Asia/Africa.

    Jeremy

  • Report this Comment On August 08, 2011, at 5:51 PM, PositiveMojo wrote:

    Buying anything immediately would be risky. The market could still drop further.

    I would recommend waiting a few days. When companies begin reporting great earnings I think investors will jump back up - and it could happen quite rapidly - especially since all of the fundamentals of most companies has been quite good. Then buy the good companies you recommend and get them cheap with less risk.

    I also need to mention that if you are a swing trader you were out of the market on July 27th and escaped all of the pain and suffering. That's what I do and had a return of 96.4% in 2009 and the first 7 months of this year had a return of 19.97%. I anticipate that I might do even better through the rest of the year now that the market is so badly oversold.

  • Report this Comment On August 08, 2011, at 6:00 PM, PatrickDickey wrote:

    I like the idea that you're putting forward, however do you see any low-cost stocks with the same dividend and earning ratios? For someone on a tighter budget, who wants to get started (and find some safety), these stocks might be a bit out of reach.

    Or could you post an idea of the search parameters that you used to find these stocks (so people could find more to choose from)?

    Have a great day:)

    Patrick.

  • Report this Comment On August 08, 2011, at 6:07 PM, Notfooled1 wrote:

    TMF MOPEY, you speak so bravely about how you will act in this crisis, but please note that you have no position in any of the stocks you mention nor do you indicate that you will establish any in the near future.

  • Report this Comment On August 08, 2011, at 6:15 PM, xetn wrote:

    Perhaps with all of this faith, you should be buying US treasuries. Yeah, that would be a good idea.

  • Report this Comment On August 08, 2011, at 6:18 PM, Borbality wrote:

    Patrick, I don't quite understand your comment. Do you mean "low cost" as far as share price? With many brokerages you can buy partial shares, so even though one share of GOOG is like 550 bucks, you can put in as much cash as you want. The share price is related to how many shares are issued.

  • Report this Comment On August 08, 2011, at 6:21 PM, Rover3321 wrote:

    For a lower cost dividend play you could look at NLY

  • Report this Comment On August 08, 2011, at 6:23 PM, ernieslog wrote:

    i bought ge & newmont mining on friday, yahoo on tuesday (today) and plan to buy more ge tommorrow, all on margin, changed my my margin loan from 10% to 20% of the stock assets. here is the kicker, i am 83, that is how much i believe in stocks

  • Report this Comment On August 08, 2011, at 6:44 PM, anutter1 wrote:

    @Notfooled1

    You wrote..

    "TMF MOPEY, you speak so bravely about how you will act in this crisis, but please note that you have no position in any of the stocks you mention nor do you indicate that you will establish any in the near future."

    Did you read his article?

    His title: "The Downgrade Be Damned: Here's What I'm Buying Now" sort of indicates that he plans to buy an as of yet unnamed stock.

    (Turns out it's Colgate)

    He also states: "The Fool's trading restrictions require that I wait two days after this article is published to make my buy, but as soon as that's up, regardless of what happens with the market this week, I intend to load up on shares of Colgate."

    (A little vague I know, but I think he plans on buying something asap... Colgate stock?)

    And he does hint at the fact that he has no position in the stocks mentioned in the above article (other than IBM) when he states: "Jeremy Phillips owns no shares of the companies mentioned above ... yet. The Motley Fool owns shares of IBM."

    Not that long of an article. Give it a read.

  • Report this Comment On August 08, 2011, at 6:50 PM, Notfooled1 wrote:

    I did read it, and, it crawfishes, as is TMF's style.

    "Sort of indicates." Isn't that a bit of a reach? In fact, TMF Mopey gives no indication that he intends to put his money where his mouth is. Under the existing circumstances, that is good.

    You apologists for the bad and contradictory advice given here are not doing your readers a service. Do you also work for the fools who run this site?

  • Report this Comment On August 08, 2011, at 6:50 PM, KyleSanDiego wrote:

    if you like mining, might want to look at buying Vale.

  • Report this Comment On August 08, 2011, at 7:16 PM, tmtrad9 wrote:

    Notfooled1

    "I'm picking one of them, Colgate, for 10% of my investable cash" He then goes on to explain the timing limitations related to the publish date (today) that he is bound by. Pretty unclear, huh?

    TT

  • Report this Comment On August 08, 2011, at 7:27 PM, TMFRhino wrote:

    Quit yer crawfishin' TMFMopey! I want a live cam with you hitting the buy button or else I won't be believin' it!

  • Report this Comment On August 08, 2011, at 7:28 PM, plantoretire1day wrote:

    Now, now boys and girls. Play nice.

  • Report this Comment On August 08, 2011, at 7:47 PM, TMFMoby wrote:

    ernieslog - You are bolder than I am. Margin calls can force you to sell at the absolute worse time, before your thesis has played out. That old saying is that the market can remain irrational longer than you can remain solvent.

    That's why I've never invested on margin, or with cash I'm going to need in the short term.

    Best of luck,

    Jeremy

  • Report this Comment On August 08, 2011, at 7:54 PM, TMFMoby wrote:

    PositiveMojo - Congratulations on your returns.

    In my opinion, buying something immediately is only risky if you're worried about what your return is going to be over the next year or two, or if you're investing with money you're going need immediately.

    I believe it's equally risky to leave a huge chunk of your investable assets in cash, as you could miss out on some great share price appreciation, and (as of today) higher dividend yields while your cash earns a mere 1% a year vs. inflation, which on average is about 3% a year.

    Foolishly,

    Jeremy

  • Report this Comment On August 08, 2011, at 8:10 PM, TMFMoby wrote:

    PatrickDickey - I have the same question as Borbality relating to your comment.

    As for search parameters, I started with companies with incredible histories of paying & increasing their dividends many years in a row. (Here's a list of 127 of them: http://bit.ly/qVr7eW. I actually own a very low-expense ETF which owns all these stocks: http://bit.ly/qmCek0.)

    I then drilled down from there, focusing on some of the items I highlight in the article, like having recently beaten estimates, in addition to some other softer factors like my personal outlook on the companies.

    I'd start with the first link and go from there. If you can't narrow it down to under 10 companies, then you'd be in great shape simply buying the ETF in the second link. A 0.18 expense ratio is hard to beat.

    If TD Ameritrade happens to be your broker, they don't even charge commission on buying it, so it's a pretty great deal.

    Best,

    Jeremy

  • Report this Comment On August 08, 2011, at 9:41 PM, EJDubya wrote:

    I think stock XYZ is a great company I would like to own. Last Monday it was trading at $150/share. Today it's trading at $125/share for no reason other than the turmoil in the market. Maybe on Wed. or Thur. it will be at $100 or $140/share, who knows.

    I have cash to invest. I won't need it for a while. I'm 4-5 years from retirement. Should I buy now? Should I wait a while? I lost $100K in 2008 (on paper) and recovered it in 2009 (on paper). What to do?

    For now I'm sitting tight until all the crazies do their thing and things smooth out a bit. I could jump in and ride it down and back up (it's a good company and it will rebound). Or I could wait a little and see where it goes? If it's a good buy at $125, it's a better buy at $100 or $75. If it turns around before it gets that low, I'll look for another good company to own. There are hundreds, or thousands out there.

    I'm waiting.I'll feel better about it. That's just me.

  • Report this Comment On August 08, 2011, at 9:44 PM, TheDumbMoney wrote:

    Keep in mind that some online brokers that don't charge a stand alone commission on low-cost ETFs actually give you a higher expense ratio than the amount stated on Vanguard's website. I"m not sure if TD Ameritrade is one.

  • Report this Comment On August 08, 2011, at 10:36 PM, TMFMoby wrote:

    dumberthanafool - Great point.

    I'm not sure either about TDA as it's not my primary broker. It lists the gross expense ratio of VIG as .23% on this page:

    https://research.ameritrade.com/wwws/common/reports/commissi...

    And lists it as 0.18% on the snapshot page for VIG. If you were considering buying it within their commission free program, it'd be worth asking them. That's about a $10 difference on a $20k investment.

    Schwab is my primary broker. They charge a regular commission on VIG and have the same 0.18% expense ratio as Vanguard.

    Fool on,

    Jeremy

  • Report this Comment On August 09, 2011, at 1:35 AM, mikefango wrote:

    just remember when the dow hit 5000 last time it still has a far ways to go before you see it start to come back up i would wait a little bit longer at least till the dow goes below 10000

  • Report this Comment On August 09, 2011, at 2:29 AM, kmacattack wrote:

    We are seeing one of the greatest opportunities in my lifetime to make a killing buying equities. I took a paper beating today, but I own some great companies that are either making a lot of money already, or they have been out of favor or in financial difficulty and have turned the corner. One example is Sirius XM radio. Even with the huge hit they have taken in the last two weeks, I'm still up 100 percent plus counting the options income I've piled up in 18 months. Sirius is a great "rags to riches story" with a genius at the helm. They are growing in subscribers, growing their profit margins with every new subscriber, they are a prime buyout candidate, they have been paying down their debt, and they will likely take a price increase in January which will produce an extra $500 million in profit. They have new technology about to hit the street, and they can grow a great deal without spending much money doing so.

    If you are looking for a great dividend, you can't beat the Zweig Fund (ZF) which has seen a major drop in the last two weeks down from about $3.40 per share to $2.70. I've owned this fund off and on since it was issued about 20 years ago, and they have always paid a 10 percent dividend. I haven't checked out their portfolio lately, but last time I looked there were some great companies in the fund. I would estimate that due to the huge share price drop versus the DOW, they are probably selling at a 15 to 20 percent discount versus book value of the combined portfolio. I would recommend you do some DD on your own, but last time Zweig was this cheap was in 2008, and it moved pretty rapidly up to a peak of about $3.60, plus paid 2.5% dividend (10 % annual) along the way. I think Zweig is a very safe play at this price. If the stock didn't move up at all in 7 years, you would still double your money if you leave your dividends in the fund and accumulate shares (free of commission). Good luck to all.!.

  • Report this Comment On August 09, 2011, at 5:26 AM, emfitzgibbon3 wrote:

    American Electric Power has paid a dividend for over 100 consecutive years and looks to have a yield of over 5%. Why no nod to them? There is uncertainty over the rate case in Ohio but the company will continue to be profitable as a regulated utility. (Full disclosure - I work for AEP but don't have any special insights).

  • Report this Comment On August 09, 2011, at 10:12 AM, Glycomix wrote:

    My guess: Thursday investors were selling all to cover their debts. So silver, gold and gold stocks went down. Friday was a lull for suckers like me to invest in the market. Monday was an equity sell-off and flight to gold as safety based on S&P's comment.

    Excellent stocks got hammered. The best stocks like AAPL and Goog just had a 3% pull-back compared to the market's 6.5%. Oil went down 10-11% even though it'll be back over $100 by the end of the year.

    What do you do while the market ? Get out or ride it out? How long are investors going to mourn bad news?

    I see reason to hope in the process. Some cuts were made!

    In 2009, congress and the president borrowed $9T over 10 years to start $10.3T in new entitlements. They current process says, "we're coming to grips with the debt." I find that encouraging.

    If you add together the numbers, it still looks scary. Next year, Obama wants to have a $3.8T budget when income tax only supplies $1T total according to the IRS. That means $2.8T in debt for next year alone.http://www.irs.gov/pub/irs-soi/08fallbulintax.pdf

    We need to raise taxes to pay for that. Let's see how much you will have to pay as an individual:you owe next year is only $50,000!* Since you don't want entitlements cut, you might want to pay for it now and avoid inflation. Don't forget to pay a multiple based upon how much your income is above $32,000. As the median wage earner's taxable income is less of next year's borrowing, If you make much more than $50k, you'll have to pay 50,000, plus a fractional multiple of $50,000.

    An additional $4.6T/yr in debt that must be staunched ($81,142/taxpayer with income >$32k).. Each year the 50% of the medicare entitlement that goes to debt increases our national debt by $2 trillion in unpaid medicare bills. This has been going on since 2002.We face a $2.3T/yr in unpaid welfare-mortgage debt hitting the banking system from congress' banks: Fannie Mae and Freddie Mac.

    These fiscal leaks must be stopped to keep the ship of state from sinking to the bottom. We then have to man the pumps by increasing taxes. It's comparatively easy to stop the medicare and the welfare-mortgage debt. The increase in medicare debt can be staunched by increase the medicare payroll tax from 3% to 6%. We'd better increase the medicare tax to 7.5% to pay for the past 9 years of 50% of the entitlement going to debt.

    Fannie Mae and Freddie Mac mortgages must be removed from the authorization law. To get rid of the threat that the welfare mortgage poses the US banking system, you don’t have to deauthorize Fannie Mae and Freddie Mac. Cutting § 4562. Single-family housing goals this year will do it! http://www.law.cornell.edu/uscode/html/uscode12/usc_sec_12_0... ¶ 1.

    Fannie and Freddie are forced to make unsafe mortgages by law, by 'stakeholder' housing groups on their board, and by stink-building democrat congressmen such as Barney Frank, William Lacy Clay, and Michael Capuano. Frank was the wizard who did all of the machinations from the background. William Lacy Clay and others attacked the Democrat regulator of OFEO who tried to rein in Fannie and Freddie's excesses. Michael Capuano from Boston was the Judas who promised stink on CSPAN in 2010 if the Democrats at Gethner's request to save the US banking system, got rid of the Fannie and Freddie Mac's welfare mortgages.

    Probably starting with people who make $75K or more, you'll pay an extra percent of the cost that people with less income couldn't pay. So if you make $200K, you'd have to pay a huge percentage of your income, much more than $100K. I haven't explored that figure. However, I know that that these tax rates would cause a 'brain drain' out of the US as it did in Great Britian in the 1950s.

    Calculations are explained in the next paragraph. Each time there's a calculation with the asterisk in front of it.

    *In the IRS's 2010 pub citing data from the 2008 tax year, they said that there was 128 Million(M) tax filers in the US. The 2008 IRS income tax pub they said that of those tax filers, 30% were filing for welfare and didn't pay taxes (earned income etc). So we end up with about 89.6M TAX PAYERS. Of those, the 2008 pub said that the upper half of the average paid 80% of the taxes. If the average means the 'median', taxpayer (~$32K), then you multiply the budget amount by 0.8 and divide by 44.8.(half of 89.6). To make calculations apply to the individual taxpayer, use $1million for $1trillion, because a trillion = million x million. Use the budget number in the numerator and 44.8 as the denominator for the total number of taxpayers. Here's the calculation ($2,800,000*0.8)/44.8 = 2,240,000/44.8 = 50,000

    I say cut any entitlement that congress didn't pay for with taxes. That includes Sen Kennedy Medicare Rx plan. (50% of the medicare entitlement, $2T/yr currently goes to debt- %Source: Alan Greenspan on Clinton's press Secy's show in '09. Amount source is dividing debt level by year [That's $35,874/ taxpayer making more than $32K/yr in taxable income]*. Do you have your check made out to the IRS? Don't put away your checkbook, there's more).

    Fannie and Freddie's welfare mortgages. Why? They're giving mortgages to people who don't have a prayer of paying them back and sticking us with the bill. Based on published data on the cost to the banking system from costs from 2006 to the present, welfare mortgage will cost us $2.5T next year. That's $44,642/Taxpayer with more than $32,000 in income.*

    Let's talk cases. In 2009 a caller to C-Span's Washington Journal said that that she homeless and and couldn't find a place to stay at the homeless shelter. Her NY case-worker told her that she'd get a mortgage from Fannie Mae and Freddie Mac. According to HUD, Fannie and Freddie had to give 15% of their loans to persons who made less than $14,000 a year.

    HUD set welfare loan goals, called by the codeword “affordable housing goals” for Fannie Mae and Freddie Mac: In 2007 HUD decided that 55% of Fannie and Freddie’s mortgages would go to group (A) above, Low income families who make below $21,000/yr; 35% of Fannie’s guaranteed loans to goal (B) areas with “at least 30% minorities” who make $30,000 or less; and 25% to goal (C) very poor to people who were 60% below the median income. The “very poor” are the same proportion as the 30% of taxfilers who pay no tax. http://www.huduser.org/portal/datasets/GSE/gse2007.pdf Info is in table 2, note 1.

    If you read about them, many of these mortgages were give with much lower interest, little to no down payment, and a balloon payment at the end of two years. There's no penalty for default.

    I'm FOR using the mini-loan system of the Grameen Bank: This is giving commercial loans to the poor to help them raise themselves out of poverty. However, destroying the US banking system will prevent US companies from remaining viable in a downturn.

    How will the

  • Report this Comment On August 09, 2011, at 10:36 AM, nancysioux wrote:

    So, if Jeremy is putting 50% of his available cash in the market, and 10% of that into Colgate, where is the rest going???

  • Report this Comment On August 09, 2011, at 11:22 AM, David369 wrote:

    Dang Glycomix, it says "comments" not books. Start a newspaper..uh, maybe a blog nowadays.

  • Report this Comment On August 09, 2011, at 2:30 PM, Rtrak wrote:

    The current situation is quite depressing, I'm not selling anything during this turmoil and have added a few new positions at values I'm happy with. I've turned 'Gloomberg' off and I've vowed to only check my holdings once a day and get on with some work!

  • Report this Comment On August 09, 2011, at 11:10 PM, TMFDukenewkirk wrote:

    Gone Fishing

  • Report this Comment On August 12, 2011, at 4:11 PM, krystoff wrote:

    A few things are being ignored here, which are as obvious as knowing that two is bigger than one.

    When there is some possibility of the market going down, and zero possibility of going up, that is not a good time to buy.

    Nor is this a good time to sell, if the market has already gone down. But two weeks ago, when the market could not possibly go up, and was likely to go down, that was a good time to sell, assuming your transaction cost is less than 1%.

    Of course, if you are a spokesperson for an investment newsletter with a huge number of subscriber, perhaps it is not a good idea to say that. However, what another investment guru is saying, is that portfolio allocation is a highly individual question, and is more important than picking stocks. This is a good time to be sure you are not over-invested. That is what I consider to be mature and sensible advice.

    The "approved" Motley Fool writers are partly correct, in that as soon as there is any chance of the market going up significantly, make sure you are in the market. You certainly can leave the market, but if you do, be sure to buy-in sooner rather than later.

    If the "approved" Motley Fool writers would take this line, instead of their "hold on regardless" approach, I think they would much better achieve their intention of reducing the effects of panic.

  • Report this Comment On August 12, 2011, at 7:58 PM, flashdonsr wrote:

    Lessons learned: I made mistakes in july 2008-march 2009. One of the lessons learned was to have more cash to buy bargains. Maybe we need a expanded discussion on what we are going to do different this time?

  • Report this Comment On August 12, 2011, at 9:30 PM, AHARDWORKER wrote:

    Stop the ups and downs. Buy Multi family housing close to a University and you will sleep really soundly. Pay it off and enjoy the ash flow. With all the money you earn trading stocks take the profit each day to pay down a mortgage. Remember Cash is King!!!!!

  • Report this Comment On August 14, 2011, at 8:46 AM, GtownRJ wrote:

    Lower cost stock to reap the dividend whirlwind?

    I like Chimera Investment Corporation (CIM), it was depressed before the market went down out of fear of raising interest rates, and that just got put off. Price target $4.25.

    Also Prospect Capital Corporation (PSEC), was down for interest rate fear as well, even though it is a different animal. Price target $11.5.

    Both companies are well run and have dividends that dwarf anything in this article, however I would be looking at a 1 to 2 year time frame, not the buy and hold forever that MF promotes.

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