Stock Market Trading at a Seven Year Discount
What if I could offer you the rare opportunity travel back in time seven years and allow you to purchase stocks, mutual funds, index funds or whatever type of security you want? Would you do it? I hope you would! Well guess what? Unfortunately, no time machine is needed. As of today, the market is trading slightly higher than it was on September 21, 2001. Our credit crisis has scared investors and each day the market falls, more and more are getting out and putting their money in safer investing alternatives.
Emotions are hard to ignore, especially when our money is involved. It’s easy for us to follow the heard, and head for the doors. I think it’s important for us to relax and if anything, seize this rare buying opportunity that has been reluctantly slammed in our face. Our markets may get worse before they get better, but by selling now, you are locking in your losses forever. Unless you need to counterbalance a gain for tax purposes, try to hold on.
Even for those in the workplace that are on the verge of retiring, I argue it may be worth it for you to not only not sell, but to buy more. Hear me out on this. If retiring is in your near future, then you most likely have a substantial amount already set aside for retirement. This allows you to live off your current nest egg during your early stages of retirement. Any money you invest now won’t be needed until the later years of your golden years. Therefore, go ahead and invest at the current seven year discount. Gobble up some equities now, and allow the market to recover as you glide enjoy your non-working years.
To be honest, every day I see the market drop a few percentage points, I get a little excited. To me its like walking into a department store and heading straight to the discount rack. Even though our economic forecast is gloomy, we can’t ignore our markets historic ability to rebound. While I write this, the S&P 500 is down about 33 percent from the beginning of the year. I don’t know about you, but 30 percent off nearly any consumer good is enough to influence me to buy—why is the market any different? $
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