Friday, September 5, 2008

I Love the Smell of Opportunity in the Morning

The unemployment numbers this morning didn't help anything, and Wall Street is taking it on the chin. For serious investors, though, it's time to quit whimpering, get off the damned sidelines and start looking at the down market as the good thing it is.

The stocks I've chosen haven't plunged, but they've given back some of their gains. So if you failed to heed my advice on these companies, now is a great time to correct your lapse in judgment.

Consider this market's aggregate buying opportunities. Of the 30,000 or so equities that trade on U.S. exchanges, 4,000 of them are down more than 40% so far this year. That's almost as good as the end-of-season blowout at the Polo store -- and some stocks have declined to the point where even that sale looks pricey.

These drops hurt. I understand that. I've had friends retire as the market bled, and that's noting to make light of. Certainly I remember what 2001-2003 felt like. But Wall Street always bounces back after a decline. (See the S&P performance table in Buffett's annual shareholder letter.) And if the market fails to bounce back, then, hell, your portfolio is the last thing you need to worry about.

The Dow shed 344 points yesterday and is off another 100 points as I write this. I'm not at all concerned. I feel like Gen. George S. Patton Jr., strolling through enemy territory on a French battlefield in World War I, dodging shells as I check my beloved tanks' progress. Just a nice night for a walk...

Those tanks, the eight stocks in my portfolio, have held up extremely well during this past two-day drop. In fact, they remain in positive territory. They are up an average 2% since I bought them last month versus a drop of more than 3% for the S&P. This gap is only going to get wider, as investors come around and begin to see the true value of these outstanding companies.

No comments: