You watched your portfolio lose 35% of its value over the past month and a half. You sighed every time you saw the headline "Buy This Stock Now." You even stopped checking for news on your stocks, because they weren't going back up.
But fear not. The market is turning.
The upside of downside
So what, you ask? So buy, I say! All of those stocks you had your eye on a couple months ago but feared paying too much for. All of those stocks you saw last month but avoided, fearful of falling knives.
Now is not the time to be afraid -- now is the time to jump. Now is the time fortunes are made. Here's why:
|
4/1/2006 |
6/20/2006 |
Price Change |
|
|---|---|---|---|
|
Microsoft |
$27.10 |
$22.55 |
(16.8%) |
|
Morningstar |
$44.77 |
$37.53 |
(16%) |
|
Sirius Satellite Radio
|
$5.07 |
$3.98 |
(21.5%) |
|
Blue Nile |
$35.19 |
$29.16 |
(17.1%) |
|
Electronic Arts |
$54.72 |
$41.21 |
(24.7%) |
|
Dell
|
$29.76 |
$24.06 |
(19.2%) |
|
IBM |
$82.17 |
$77.67 |
(5.5%) |
I've had my eye on these seven companies for the past few months. Each of them has a strong business model that involves innovation and new technology, and each one has a significant moat to protect it from competitors. And they are all much cheaper now than before. In fact, I did buy shares of Blue Nile recently (abiding by Fool trading rules, of course). It's just one of the great companies out there with a wide moat and a proven business model, and I was happy to find it when it was cheaper.
So what does this prove?
- Every stock goes on sale, so you must ...
- Have a wish list of investments with rough buy-below prices for your appropriate margin of safety. With a wish list ready, you can pounce when ...
- The price is right -- and most of the time, the market will beat down on your stock at some point, giving you an optimal entry point.
The Foolish bottom line
The market is turning -- it might not be evident right away, but if you buy quality companies on the cheap, you'll be happy for the occasional downturn. In fact, the recent market slump can be viewed simply as the sale that value-diggers have been waiting for.
At least, that's what Philip Durell, the Fool's very own value-digger, told me. As advisor of the Motley Fool Inside Value newsletter service, Philip uses short-term panics to snap up worthy long-term investments. His Inside Value picks have been worthy thus far -- they're beating the market by more than four percentage points since the newsletter's inception in September 2004. To see Philip's two newest bargain-priced stock recommendations and the more than 30 other buy reports for free, click here for a no-strings-attached 30-day trial.
You heard it here first -- the market is turning. Aren't you glad you checked the news today?
Fool financial editor Shruti Basavaraj owns shares of Blue Nile and Microsoft but none of the other companies mentioned. Microsoft and Dell are Inside Value picks. Blue Nile is a Hidden Gems and Rule Breakers pick. Electronic Arts and Dell are Stock Advisor recommendations. The Fool has an ironclad disclosure policy.
