Who's Buying?

Warren Buffet just spent 4.7 billion...

 

My money guy at Raymond James says the market has several months till it bottoms out.

 

His opinion is just that.


Back to the OP. Yes, I'm on a buying frenzy.

 

If a person buys into a well run company that sells a good product for a fair price he will do OK.

Last week I turned on a business show and I think I heard a guru recommending a company that is selling for 70 times earnings. If I was running my account I wouldn't buy anything worst than 25 times earnings.
If I want fun with my money I buy a lottery ticket and go for broke.

 

I think it's necessary to wait to determine whether this is a normal bear market. The correct strategy for the stock market most of the time is to buy and hold but there have been periods in which that's a terrible strategy. After the 1929 crash the market didn't get back to its pre-crash levels until 1954. That's 25 years. For most of us here that would be a catastrophe.

 

Get out before they go bankrupt!

 

Easy to know what to buy. Hard to know when to sell. <G>

 

Ann --

My initial thought is that cash is really good now. The common wisdom I hear is to stay away from the market unless it is extra $$ or it's your 401k since you would penalized for touching it. Thus, a simple savings account or CD might make sense -- though not nearly as much fun as stock. (OK, I admit I'm more than a bit jaded since I just received my 401k statement -- now down to a 201k.)

I have to admit I like your idea though -- buying something that they could hang on to for years. If you do this, I would go with something big and relatively safe (whatever that means these days) and perhaps something they can relate to --- like Disney, Coke, etc. That way they could follow the stock over the years & it would be a great learning experience.

Good luck whatever you do --- FOS

 

Mutual funds.

I'm not a financial planner, so take this for what it's worth, but a solid portfolio of different types of mutual funds (growth, growth and income, etc) will provide the best investment bang for the buck long-term. At their age, investing for the long-term should be the plan. Mutual funds provide a nice rate of return and the diversification helps weather rough economic times.

 

Ann -- Did you see the news today on ING? ING is a Dutch company and the Dutch government just pumped $10 Billion Euros into them ($12.7B US) after posting a loss of almost $500 Million Euros in the 3rd quarter. I know they are FDIC insured, I just wanted you to know.

Regarding mutual funds, they have been the investment of choice for many years due to the diversity that ccrobinson mentioned. That being said, almost all of my funds are in a loss position for the year -- even the "conservative" ones. If I didn't have the tax benefits, the company matching and the dollar cost averaging, I wouldn't be there.

Lastly, the market is down 1,000 points since the election. Unfortunately, I think it's going to get a lot worse before it gets any better.

Good luck on this. And kudos to you for training your kids to save.

 

Double post

 

Buying low is the best time to buy. But, FOS' caution is well-advised. I would highly recommend that anybody wanting to go the mutual funds route, or any investment for that matter, do nothing until you do your research and understand it completely. If nothing else, consider putting the money into a short-term CD while you do your research and decide what to do.

 

Totally agree. A friend's money manager convinced him to put $$$ into certain mutual funds late last year. As a result, it will take many years for the market to come back to where it was so he will not take a huge hit. Right now, he's probably down 30% or more. Short term CDs are very safe -- and will allow you to do your research without letting your money just sit there.