In an article I wrote last month called "What’s on Your Doomsday List?" I wondered out loud whether the Aug. 2 debt-ceiling deadline would turn into a day of epic economic woe, or whether it would be more like the overhyped Y2K and produce nothing but piffle. If the former, I suggested creating a list of stocks that could become real bargains if the market tanked.
Be greedy when people are fearful
As we all are aware, the market did indeed drop precipitously –-- even without a government default. I may have been off by a couple of days in my timing, but I wasn't wrong about getting a shopping list ready. Here is a recap of what I wanted to buy, how those stocks fared, and what actions I took.
My Doomsday Watchlist
|
Company |
Price, 7/19/11* |
Price, 8/4/11** |
My Target Prices |
My Actions |
|---|---|---|---|---|
| Johnson & Johnson (NYSE: JNJ) | $66.72 | $61.84 | Mid-$50s | Still watching |
| McDonald's (NYSE: MCD) | $86.21 | $84.28 | Low $70s | Not holding my breath |
| PepsiCo (NYSE: PEP) | $68.54 | $63.35 | $50ish | Bought at $63.50 Aug. 1 |
| Coca-Cola (NYSE: KO) | $69.32 | $65.80 | $50ish | Still watching |
| Costco (Nasdaq: COST) | $80.81 | $76.50 | $60s | Bought at $76.00 Aug. 2 |
| Berkshire Hathaway (NYSE: BRK-B) | $76.29 | $70.95 | Below $70 | Still watching |
Source: Yahoo! Finance.
*Original article publishing date.
**Date of the 4%-plus Dow drop.
What next?
I started writing this the Saturday after S&P took America's credit rating down a notch, exactly what we were afraid would happen if we defaulted. Now, I'm watching the stocks heading further downward.
McDonald's, in particular, has seemed pretty resistant to stock market jitters, so I wasn't holding out hope there for a real bargain. But it's being punished today along with the other stocks in my list. Berkshire is now in my buy territory, and I intend to make a purchase if it's still there in a couple of days, when I am allowed to purchase a stock I write about.
It's probably a good time right now to start making up a shopping list of your own. You can start right now by putting together a Watchlist. Start one for yourself from scratch, or follow along with my list.
