When stock markets drop like they have over the past month, almost everything goes down, even if they are great companies that are doing well. It is sometimes referred to as “throwing the baby out with the bath water”. The over selling is usually caused by investors that don’t have a plan, so they would rather sell everything and ask questions later. This happens periodically, most recently at the end of last year, 2018. Market reactions like these end up creating opportunities for patient investors looking for a bargain.
So, if you have been waiting for a chance to invest in some great companies but were hesitant because prices were too high, now might be a good time to check them out again. These situations are ideal for investors planning to hold on to their investments for three years or more. That amount of time allows you to weather the inevitable short-term market dips like the one we are in right now.
Most importantly, make sure that you do your homework. It does take some time and research, but if it were easy, we’d have a whole lot more Warren Buffets running around.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
