Buy, Buy, Buy!

During the past few months we’ve witnessed quite a stir in the financial markets. Company’s flounderingin debt are beginning (or already have) to sink. Company’s with substantial cash positions buying up under-performing ones at bargain prices. The stock market bouncing up and down like a dingy in a hurricane. Which ever way to look at the financial marketplace, times are certainly uncertain. That’s why today is a great day to invest.

True investing is placing your money somewhere that isn’t going to be touched for at least five years. This will allow it to grow through seasons of ups and downs. When we find ourselves in a season such as this, where everything seems to be hitting 52-week lows or underperforming, we should be looking for every spare peny we can muster and get it invested. It’s kind of like shopping the day after Christmas. There’s this huge balloon of shopping that goes on for about 6-weeks and then all of sudden, it pops. It’s over. The shopping rush is over and every store wants to clear out their remaining inventory. Prices are slashed 70% to 80% off the retail price and deals are sitting on every shelf. If you’re smart (and don’t mind waiting to open presents for an extra day), you’d hold onto all your cash until December 26th and then buy, buy, buy!

That’s the kind of market we are in. For those with cash it’s time to buy, buy, buy! There are great deals everywhere just waiting to be had. It’s a rare time in history (only 4 or 5 times in the last century) that the market has offered so many good funds and company’s at such attractive prices. Don’t get stuck looking backward in a few years when prices have rebounded only to say “I wish I would’ve invested more”, because by then it will be too late to capitalize on the deals that are currently abounding.

Recession = Opportunity

Recession. It’s quite a buzz word right now in the media. I understand that for many people the economy is presenting larger than average challenges and their stress levels have risen. Reports suggest that consumer confidence is decreasing while foreclosures and unemployment are increasing. Not a good trend to be sure. However, maybe the term recession isn’t the best word to be describing the current economy we are experiencing these days. In fact, I’d like to submit a new word for the economic season we are in: Opportunity.

You heard right. Opportunity. We are experiencing a great economic season called opportunity and it’s a season, like all seasons, that comes and goes. While the media does a fine job detailing all of the things that are going wrong in the marketplace and at home, there are just as many positive elements that could be pointed out. Here’s a short list of the positives elements that our current economy provides that you will likely hear little about from mainstream media:

1) Reality check - A recession merely opens our eyes and exposes us to the financial missteps of our recent past. It illustrates our over-consumption of goods and services, our negligence to focus on savings and investing, and reminds us that season of huge increase/profits don’t necessarily last forever. Without this reality check, many people would get into a much larger hole than they are in now before realizing it, making it even more difficult to find a way out later.

2) Barometer – A recession gives us a good gauge as to how well our financial planning efforts are working. Are emergency funds in place? Are savings and investments diversified correctly? Are my spending and debt reduction levels appropriate? Without a good test we might not have to answer these questions until it’s too late to effectively make adjustments.

3) Opportunities Abound – A slow economy is traditionally one of the greatest times to find a true bargain in the investing world. If you’ve done a good job managing your finances prior to running into a sluggish economy, it’s time to repeat the rewards….and there’s lots of them to be had! Foreclosures, bank owned property’s, under-performing mutual funds, fire-sales, and other investments can all be found at bargain prices during a poor economic season. A few short years of downturn (short when taken in the perspective of a lifetime) to a well positioned investor (anyone with the means to buy when times are tough) equals huge profit potential and almost guarantees future financial success. For investments like real estate, where the profit is made at the purchase (more on that another time), a market with huge supply and little demand will get you any type of property you want at 20-40% below market value or less. It’s like going shopping for winter apparel in June: sale, sale, sale!

If you’ve done a good job with your financial planning then enjoy it, get out there and find your bargain investments. For those of you not in a position to go bargain investment shopping (which is sadly a large number of people), don’t worry. Use this season as a good lesson to build from so that next time around you will be able to repeat the rewards of a down economy.