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When blood flows in the street

Investors ran for the hills last week. In the week ahead, they are likely to do the very same thing. What should a smart investor do? Buy. That's right. Buy. I am not crazy and I'm doing the exact same thing myself.

The price of stocks has been scaled back to where it was in 1998. Soon, we might see 1997 prices come back. Maybe even 1996. Ever wish you could turn back the clock and get in on a sure thing? Now is just such a time.

It may sound sickening, profiting from tragedy, but the bottom line is people are running scared. They fear a recession. Why? Because it will hurt corporate profits for a while. They fear more attacks. That is natural.

What has fundamentally changed in our economy? The answer is absolutely nothing.

Now comes the important question. How much to invest? When? How much is simple. Not everything you have available. If you have say $20,000 in available cash, It might be smart to put say $1,000 a week into the market for the next 20 weeks.

This way you don't have to time the market. As the market continues to plummet, and it will, you will get increasingly better prices for everything you buy. There are some obvious sectors to stay away from. Airlines and Insurance.

But who decided that GM was going to stop selling cars? Certainly not GM, because they just initiated a patriotic 0% finance promotion on every model they sell.

There are two ways to send a message to Ossama Bin Laden and it doesn't have to be on the tip of a cruise missile. Buy stuff and stocks. Simple. Not more than you can afford. Don't spend all your money at once.

The concept is one we've pushed for years year. Dollar Cost averaging. We just got a chance to lower the average price of our stock portfolios substantially.

I for one have been putting around $1,000 a week from cash to stocks, split evenly between S&P 500, Fidelity Contra Fund and an International stock fund. I've actually been doing this since August. I've still got plenty of cash left over and will be buying for at least the next six weeks.

When was the last time you saw a sign in front of corporate America reading "On Sale, 1998 prices" You probably won't see that kind of bargain again.

Note: Individual investors should seek the advice of a trusted investment advisor. Investmenttool.com is not licensed to give securities advice. Nothing in this article should be construed as such.

There is an old saying in investing. The best time to buy is when the blood is flowing in the street. For the past 8 sessions, the blood has been flowing copiously on Wall Street. Please forgive the analogy.

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Shmuel Protter
investmenttool.com

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