OFF THE WALL: I am looking to buy

red line

red line

This week’s mantra: The market will bounce back…om

This week’s mantra: The market will bounce back…om

By Daniel de la Rosa

I took a look at my IRA Monday morning.

Everything was in the red. From Apple to Lockheed Martin, from Facebook to Gilead – there was no stock in the portfolio that was not being pounded in Wall Street. Despite all that, believe this: I am looking to buy. For me, the current sell-off partly caused by China is an opportunity to look for stocks by good American companies and open a position there.

Take IBM for example. It’s had horrendous quarter after horrendous quarter. But it is trading around $146 and not too far from its 52-week low of around $142. The company has good cash outflow, is trying to remake itself and has raised its dividend for years on end. The company is not going away and you know it is going to come back eventually.

Yes, I am looking to buy. When the market is being sold off, I am on the hunt for bargains to pick up on the cheap. You really need a cold-blooded, calmly analytical attitude when it comes to stock markets.

The question you need to ask yourself is: What is your investment horizon?

Are you looking for a quick score in the markets? If you are thinking of timing the stock market, you’re better off blowing your money at Belmont or fly to Vegas and play blackjack. You’d probably get better odds.

My investment horizon is 10 to 15 years. My portfolio is choke-full of American companies that have historically performed well. Talk about BlackRock and Johnson & Johnson, Wells Fargo and Visa.

Will these stocks come out of this slump? Yes.

The market has been on a bull run for the last seven years. It had to correct sometime. With an investment horizon of up to15 years, the only time I will really worry about my stock positions is in 2030.

Stock market sell-offs and rallies are always overdone. The players all get on one side of the boat to the point the market will then head the other way. The U.S. economy is growing, maybe not spectacularly, but expanding nonetheless.

I also tend to put my trust in the history of these U.S. companies, specifically their ability to generate returns for shareholders over the long term.

So if you do not have extra cash in your account to buy more stocks, the only thing to do is really nothing. There is no magic bullet out there to replace the basic common sense of sitting back and letting the whole thing play itself out.

Remember, all the bad news is being priced into the markets. At some point, the bad news will be discounted. Then the market players will have to find something else to talk about.

When I started writing this column, my portfolio was down almost $6,000. I am about done before noon and the losses have been trimmed to $3,000.

I know it is hard for a retail investor to look at his IRA, see it down several thousand bucks, and not be tempted to cut their losses by hitting the sell button.

But I remember seeing an interview with Warren Buffett and he was asked what his favorite position was in the market. Hold, he said. Same here. I think the stocks in my IRA are keepers. I am even considering moving some to a Roth IRA to keep them forever and transfer them to my daughter when I go. But that’s a topic for another piece.

For now, don’t let the bloodletting on Wall Street spook you out of stocks that you bought at much cheaper levels years ago. The market will bounce back. Just stay cool and chill.

‘Off the Wall’ is a regular column on the stock market. The comments are the author’s own, and are not meant to recommend the buying or selling of stocks.

red line



Leave a Reply

%d bloggers like this: